News story

25th March 2002

Pension Credit "Eye-Wateringly Complicated"

Steve Webb MP, Liberal Democrat Shadow Work and Pensions Secretary, today joins in all-party opposition to the Government’s State Pension Credit Bill in the House of Commons.

The Pension Credit will be introduced in 2003 and will bring 5.5 million of Britain’s 11 million pensioners within the scope of means-testing. The Government claims that it will reward the savings of today’s pensioners, and encourage today’s workers to save for their retirement.

Steve Webb will say:

“The Government has already admitted that one in three of those entitled to the new Pension Credit will not claim it. As a result, many small savers will get no reward at all for their savings. This would not have been a problem if the money had been spent on the state pension instead.

“As for today’s workers, it is simply preposterous to imagine that people will sit down, do the sums, speculate on the shape of such a complex scheme in thirty years time and base their savings around it.

“No-one will have the faintest idea what the Pension Credit means. It is eye-wateringly complicated. The £2bn could have been used to put £15 on the pension for the over 75s. This would have tackled pensioner poverty and rewarded today’s savers by lifting thousands clear of the means-test altogether. The Government needs to think again about its misguided pensions strategy.”

ENDS


Notes to Editors:

· The Pension Credit is due to be introduced in 2003. It will cost £2 billion and will be made up of two elements: 1) A “guarantee credit” which will ensure a minimum income level to those aged 60 and over. This is effectively the continuation of the Minimum Income Guarantee. 2) A “savings credit” which will, for those aged 65 and over, provide an additional income for pensioners who have low or modest incomes in addition to the basic state pension.

· The State Pension Credit Bill has its second reading in the House of Commons on Monday 25th March. The Liberal Democrats will join with the Conservatives and prominent Labour backbenchers to vote against it.

· During the Second Reading of the Bill in the House of Lords, on 18 December 2001, Government Minister Baroness Hollis of Heigham stated: “We are assuming two thirds take-up in the first year.” (Official Report, column 189).