Pensions White Paper and Restoration of the Link

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2006 Retired Members' Conference
22 September 2006

Conference notes that on May 25th 2006 the Government published a Pensions White Paper setting out how it planned to implement the recommendations of the Turner Report.

The White Paper contains some positive proposals intended to increase the value of the state pension in the light of the decline of many occupational pensions and include more women, namely:

1)restoring the link between future increases and rises in average earnings, from the next parliament;

2)reducing the number of years of national insurance contributions it takes to earn a full basic state pension to 30;

3)introducing a National Pensions Savings Scheme from 2012 into which workers will be automatically enrolled;

4)introducing measures to enable people caring for children or the disabled to build an entitlement to a state pension, without having to make a minimum level of national insurance contributions.

However, Conference notes with dismay that the White Paper excludes today’s pensioners and is still subject to the Treasury’s approval. Conference believes that if the Government now concedes that the state pension should be linked to earnings, we should not have to wait a further six years, during which time the relative value of the pension could go down by another 6%.

In addition, Conference is concerned that the link will be with earnings only, whereas when the link was broken in 1980, the increase was the better of average earnings or prices. Although earnings tend to increase faster, not having any Retail Price Index (RPI) underpinning means that pensioners would be very vulnerable to periods of high price inflation that would mean either suffering and poverty or unplanned increases in means-testing.

Conference therefore calls on the National Retired Members’ Committee to pursue through the National Executive Council and appropriate channels, including the Labour Link, the National Pensioners’ Convention and the Trades Union Congress, the following;

a)the immediate restoration of the Pensions Link to April 2007 rather than deferring it until 2012;

b)an immediate substantial increase in the basic state pension to £138 per week to restore its value

c)a pensions link to earnings indexed to the average male earnings or inflation (Retail Price Index) whichever is the greater.