- 2009 Retired Members' Conference
- 5 October 2009
Conference notes that an estimated 9 million of the UK’s 11 million pensioners rely on some form of income from savings as an integral part of their income, and that the value of this income has dropped significantly in value amid the economic downturn. Such savings – put aside from income when employed – were seen as a way of supplementing inadequate pensions and avoiding the need to rely on means-tested state benefits in retirement. These pensioners are today struggling to maintain their living standards in the face of the lowest interest rates in Britain’s history. The fall in savings income has come at the same time as escalating food, heating and lighting bills, which have hit elderly people especially hard, because such a large proportion of their income is spent on these basic costs.
The Pension Credit is a means-tested benefit designed to top up the state pension from £95.25 per week to a minimum of £130 (£152.30 to £198.45 for a couple).
Although the aim of the Pension Credit is to try to help reward those on modest incomes who try to save for their retirement it is the view of conference that as essentially a means-tested benefit it can penalise those very people that it’s supposed to help. Furthermore, pensioner savers in particular can lose out by their pension income (which includes the state pension) being taken into account for qualifying income purposes. The interest earned on personal savings criteria, used when calculating the amount of Pension Credit that might be received, is still at an unrealistic and unobtainable 10%. Conference believes that this can actually act as a deterrent to saving for many on low incomes as they could simply be saving to generate an income that they could otherwise simply get through the Guaranteed element of the Pension Credit if they were not to save. This should be changed, to be calculated on a realistic current basis, linked to the Bank of England current base rate.
The April 2009 Budget contained some measures that the Chancellor claimed would protect living standards for pensioners. These measures are seen as inadequate, and it is clear that more effective strategies are required. It is grossly unfair that pensioners reliant on interest from savings should be hardest hit – and least helped – because of the greed and maladministration of others.
Conference recognises that only a substantial increase in the value of the state pension can overcome this loss of income.
Conference instructs the National Retired Members’ Committee and calls on the National Executive Council to liaise with the National Pensioners’ Convention, Trade Union Congress and all appropriate organisations to formulate a campaign strategy and to campaign for the removal of pensions saving as qualifying income for assessing entitlement to the Guaranteed element of Pension Credit as well as campaigning for the savings threshold for qualification purposes to increase so as to try to widen the coverage for those with very small savings who are in need of the most financial assistance. To this extent Conference notes April’s Budget announcement of increasing the savings threshold of £6,000 to £10,000 from November 2009 as a step in the right direction in this regard. The campaign strategy to be published in Interactive before the 2010 Budget to enable all retired members to participate in the campaign.