Kevin Rowan column
May 15 2006 By Kevin Rowan, The Journal
Some will welcome the apparent pensions deal struck by the Chancellor and Prime Minister last week, to reintroduce linking pensions increases to wages instead of inflation from 2012.
Many will see an unacceptable delay in restoring a link vital to ensuring the State pension ceases to be increasingly irrelevant as a means of providing retirement income. Even the Conservatives, who abolished the link in the dark Thatcher days, believe pensions should be linked to earnings.
There is strong support right across the political divide, in fact, to link the State pension to earnings, and also to give women a fairer deal on pensions, according to a survey of MPs carried out by the Peoples' Pensions Coalition - a group set up by Age Concern, Help the Aged, the TUC and Which?
Millions of women face more severe poverty in retirement due to the fact that in their working lives, taking career breaks to raise a family or care for older relatives, their contributions were reduced, making their State pension worth much less than that of men.
Radical reform of the State pension is needed to bring it up to a level that takes pensioners out of `means testing' to secure a minimum income; reforms based on residency rather than earnings are also needed now to prevent more women joining the ranks of impoverished pensioners.
There is also strong support for compulsion in occupational pension schemes, as recommended in the Turner Commission report, with the strongest support among Labour MPs.
And if the national pension savings scheme does go ahead, there is considerable cross-party consensus about how the scheme should work. Each of the major party's MPs put `portability' as their top objective, closely followed by "having pensions assets ring-fenced and held in trusts so legal ownership of the pension resides with the individual".
"Providing a simple single default scheme that would suit most employees" came third - again with all-party consensus. "Keeping costs down to (the Turner recommended) 0.3%", was also seen as important by MPs.
The survey shows that there is the basis for a real consensus behind the recommendations set out in the Pensions Commission report.
Restoring the link with earnings has long been a trade union demand, and now commands all-party support.
The Government should make the most of this Parliamentary consensus and act to introduce radical pension reform. But it should not wait until 2012 to introduce any changes. Now is the time to deal with all of these issues, and you never know, it might just make the Government popular again.
