Cable announces pensions shake-up
Monday, 25 October 2010 11:32 AM
By Peter Wozniak
Vince Cable has implied radical plans for pension reform, in a bid to simplify the existing system.
The business secretary was speaking ahead of a speech to the CBI, where business leaders are also hearing from David Cameron and Ed Miliband.
The full details of the reforms are unknown, though it was reported in the Daily Mail this morning that means-tested top-ups could be replaced by a minimum period of British residency.
It is proposed that everyone would receive the same state pension regardless of how much national insurance they have paid during their careers.
Changes would also mean more women would qualify for the state pension. Those women who stop working in order to raise children presently often do not accumulate enough NI contributions to receive their pension.
Dr Cable said in an interview on BBC Breakfast: "We've taken the first big step, which is to link pensions to earnings."
The business secretary argued the changes being led by pensions minister Steve Webb would "protect the position of women" and would overall represent "very good news for pensioners," though stated that reform would not happen overnight.
Mr Webb is set to announce further details later in the year with a green paper setting out the changes.
Douglas Alexander, Labour's shadow pensions secretary, argued the announcement was political cover for the impact of the spending review.
"Of course we are prepared to work with the government to try and build a stronger state pension with better entitlements for women but the government needs to produce the full detail of their plans so that people can make an informed judgement," he said.
"What I would be worried about is the government using headlines like these to try and hide the fact that pensioners will be hit hard, without any compensation, by January's VAT rise and last week's changes that hit pensioners who have saved for their retirement."
Dr Cable will also address the CBI later today, insisting that the UK has strong prospects for growth despite the impact of the spending review.
He said this morning: "The key for the future is how we get growth, how we get job creation in private business, particularly small-scale enterprise.
"It's partly getting rid a lot of the bureaucracy that stops small firms growing, making sure they get access to credit, making sure there are cuts in the tax that companies pay on jobs, but also being pro-active."
Growth figures for the economy will be revealed tomorrow and are expected to show a slow-down from the last quarter.
The business secretary acknowledged this but insisted the economy would not dip back into recession.
"The recovery is going to be difficult... the world economy has just gone through a massive shock," he said.
"The independent forecasts that we have from the Office for Budget Responsibility suggests that we can have every confidence that the economy will continue to grow: Not in a spectacular way but it will continue to grow."
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