The Future of Pensions

Written by Vincent Cable MP and published in Richmond Informer on Fri 6th Feb 2004

Speaking this week to Richmond's Older Persons' Forum brought home the financial problems besetting pensioners. And having recently received my first winter fuel payment I realise that this isn't just an issue for other people!

First the occupational pensions system is in crisis. A growing number of companies are closing their funds, in some cases drastically cutting their pensions. Local residents who work for Globeground, Parsons and EMC have painful experience of such ruthless and exploitative companies. The Pensions Minister told me in Parliament this week that over 50 companies abandoned their pensioners in this way last year. In the two years until the government's Pension Protection Fund starts, others will follow.

Second, those who have invested in a private pension have seen their value slashed. We are promised, very soon, the Penrose Report on Equitable Life, a sorry tale of reckless company managers and bungling civil servants who were supposed to regulate the company but fell asleep. I have led the campaign in parliament for recompense for policy holders but the Chancellor is unsympathetic.

Worst is the position of state pensioners. The state pension is not enough to live on. The government itself admits that over half of all pensioners will depend on its new means-tested Pension Credit. A quarter of pensioners never claim benefit because of pride or confusion. Those with savings and small private pensions are penalised (though the new Credit it is better than the old system).

The system is a mess. We need more generous state pensions, for older pensioners especially; second pensions which are secure; and incentives - not penalties - to save.

And politicians from all three parties have to cooperate since a new deal for pensioners has to last for decades, not just until the next general election.