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Decision Time Looms For Pensions

August 28, 2006

Decision Time Looms For Pensions

Contrary to widespread belief, the parliamentary recess is not just a long holiday for MPs here in Westminster! The summer break provides us with a valuable chance to focus on constituency work and plan for the coming parliamentary session. Understandably, the public’s attention has recently been fo…

Decision Time Looms For Pensions

Contrary to widespread belief, the parliamentary recess is not just a long holiday for MPs here in Westminster! The summer break provides us with a valuable chance to focus on constituency work and plan for the coming parliamentary session. Understandably, the public’s attention has recently been focused on dramatic domestic and international news stories. As politicians, however, we have to also keep an eye on and carefully consider some of the less immediate, but similarly important, issues that will need to be confronted after the summer break.

With the possibility of Bills in each of the next two sessions of parliament to implement the government’s White Paper, ‘Security in Retirement’, many MPs’ thoughts are turning to the pensions issue. To prepare for the autumn and to supplement my own thinking on the matter, I have spent the last few months asking my constituents what they believe should be done about the looming pensions crisis. As well as meeting constituents here at the House, I asked residents in the City of London for their own views on the age of retirement as part of my spring survey.

The constituency survey wielded diverse and thoughtful responses, and I was encouraged by the level of support shown for reform of the pensions system, even if that reform would involve confronting some difficult realities. Surprisingly, only 7% of respondents were explicitly against an increase in the retirement age of 65, with many indeed volunteering the idea of a rise ? 18% favoured an increase to 68, whilst a further 11% approved of retirement at 70. Many demonstrated a degree of acceptance that the current pension system in unsustainable, echoing the sentiments of one constituent who believes ‘the pension world is significantly more complicated and messy than it was a decade ago.’

The need for choice and flexibility in a revamped system was a common theme in constituents’ answers, with just over half of respondents believing that people should be allowed to work as long as they wish. As one respondent succinctly put it, ‘some people can work through into their eighties and others have burned themselves out at fifty. There is no norm.’ Many stressed the need for retirement age to be based on job type, particularly with regards to manual workers, while others suggested that individual reviews should determine retirement ages, and state help should be given in the form of tax relief and incentives as opposed to handouts.

Whilst I was reassured by the maturity of constituents’ replies, I was struck by the number of those who felt that they still did not fully understand the pensions issue and the implications of a change in the retirement age. The survey results make it clear to me that politicians must work harder to further inform and educate the public about pensions. In my opinion, it is particularly important to create awareness amongst young workers, on whom a failure to reform would have greatest impact. As I have said before, I consider the current pensions system to be a pyramid sales scam against the young, and I believe that this is an unacceptable burden to place on the next generation. We really risk inter-generational conflict if we fail to address the fact that too many of today’s pensioners have not paid enough into the collective pensions pot to justify what they anticipate as their due. For decades politicians have contributed to this by offering a Dutch auction at election time. This must stop.

Politicians must not be frightened to make the case for radical change to the pensions system, nor be tempted simply by the preferences of older voters who are more likely to turn out on polling day. To this end, I believe that ideally a broad consensus is required if solid, lasting and rational reforms are to be made. After all, it is simply unrealistic to suppose that the state can continue to cope with the escalating expectations of Britons throughout their increasingly long retirements. My constituents have demonstrated to me that the public is ready for politicians to make some tough decisions.