Lib Dems unveil pensions boost

Tuesday, 7 September 2004 12:00 AM

Over 75s would have their state pensions increased by up to £25 a week under plans being unveiled by the Liberal Democrats today.

The Citizens Pension, which would restore the link with earnings, would see single over 75s receive an extra £25 a week and couples an extra £33.70 a week.

Leader Charles Kennedy said the plan would lift one million pensioners out of means testing.

It is part of a detailed policy on pensions launched by the party, which also proposes reforms to occupational pensions, private pensions and the retirement age.

It comes on a day that the Government's pensions policy is in the spotlight following the resignation of Work and Pensions Secretary Andrew Smith for family reasons. Steve Webb, the Liberal Democrat pensions spokesman, said Mr Smith's reign would be remembered for pensions crises.

The Citizens Pension is intended to tackle poverty amongst the over 75s, who are typically the poorest pensioners and predominantly female.

It would particularly benefit women who were unable to build up their National Insurance Contributions as a result of caring for their children at home instead of working.

"Overnight we will lift one million pensioners out of means testing and we will ensure an extra £25 a week on the basic state pension for single pensioners," said Mr Kennedy.

"Many pensioners are missing out on a decent pension because of the complexity of the Government's Pension Credit. Our Citizen's Pension will give people a decent pension as a right without needless form filling and bureaucracy."

Liberal Democrats say they would meet the £2.7 billion cost of the scheme by abolishing the Department for Trade and Industry and slimming down central Government.

Mr Webb said: "The present system is too complex and rigid. The pensions system should be simple and secure so that people can make informed choices and know that their money is safe."

Occupational pensions would be reformed through the creation of a kitemark system and by making them "opt out" schemes rather than "opt in" schemes, ensuring that employees made a conscious decision not to save.

Incentives to save would be increased by reducing means testing, removing the requirement to buy an annuity at 75 and offering new low-cost pensions run by National Savings.

Employers would also be forced to scrap retirement ages and a "flexible decade of retirement" would be introduced enabling workers to claim part of their pension while working part-time.

Mr Webb said the new Secretary of State would face many challenges: "Andrew Smith's period in office will be remembered as one when the crises in company pensions grew unchecked, where mass means testing was the order of the day and the pensions system became more complicated than ever.

"The new Secretary of State needs to reverse the drive towards means testing, restore confidence in company pensions and radically simplify the whole pensions system."

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