News story

4th October 2002

£13 Billion To Correct Tory Pension Blunder

Plans to cut SERPS pensions for widows and widowers will finally begin to take effect this Sunday (October 6th), after being deferred at a cost of over £13billion because of the failure of successive Conservative Governments to tell pensioners what they had done. Commenting, Steve Webb MP, Liberal Democrat Shadow Work and Pensions Secretary, said:

“It was a scandal that the Tories halved pension rights for widows and widowers without telling anyone about it. Millions of pensioners faced a poor old age because the plans they had made for their surviving spouse would have been halved at a stroke.

“The Liberal Democrats were at the heart of the campaign to cancel these cuts for all existing pensioners and to give non-pensioners more time to adjust to the changes. We are delighted that the Government has seen sense on this issue.

“But the fact remains that when these cuts are fully implemented, many elderly widows and widowers will get even smaller SERPS pensions than today.

“This makes the case even stronger for a substantial rise in the rate of the basic state pension, focused on older pensioners. Otherwise new generations of widows will face poverty in old age”.

ENDS


Notes to editors

1. SERPS (the State Earnings-Related Pension Scheme) is paid in addition to the basic state pension.

2. In 1986 the Conservative Government changed the law to reduce the amount of SERPS pension (to 50 per cent) that a person widowed after April 2000 could inherit from their late spouse. Previously, widows or widower could inherit a maximum of 100 per cent of SERPS pension. But, for many years after 1986 some people were given incorrect or misleading information about the change and may have planned for their future on that basis. As a result, the Government postponed the change from April 2000 to October 2002 and announced further rules for the maximum percentage of SERPS that can be passed on to a widow or widower, when someone who has paid into the scheme dies. These rules have been approved by Parliament and will apply from 6 October 2002.

3. The changes are explained in detail on the DWP website: http://www.thepensionservice.gov.uk/pdf/serpsmar02.pdf

4. “The mix-up over the State Earnings Related Pension Scheme could cost more than £13bn and take 50 years to put right” – the Commons Public Accounts Committee (quoted from BBC News Online http://news.bbc.co.uk/1/hi/uk_politics/883100.stm).