Don't mess with our pensions!
I wonder how many UK employees, and current and future pensioners, understand that their UK state pension, for which they have worked and paid, is now under threat. Indeed, if they decide to retire abroad, along with the more than one million current ex-pat pensioners, they could lose their pensions altogether. Although various financial pundits have suggested “that under the new pension act there will be more pensioners worse off than better off, compared with the existing system”, the Chancellor has courted us with tales of how the new Pensions Bill will be better for everyone. The fact is that these real threats became law by royal assent on 15 May 2014.
From Gordon Brown onwards, the government has chipped away at pensioners’ savings, benefits and pensions – irrespective of whether they stay in the UK, move to Europe or retire to a Commonwealth country - but it is now attacking the very foundations of security of state pension in which so many people depend in retirement.
We have depended on being national insurance contributors and that employees and employers are statutorily required to pay into the national insurance fund. That fund, you may think, is sacrosanct; after all the current Pensions Minister, Steve Webb, said in 2004, in relation to frozen pensions, “We ask people to make contributions all their life to accrue an entitlement. Why should that accrued entitlement vary according to where they choose to live? That doesn't sit well with the idea of a contributory system. Should we penalise those who retire overseas to be with their children or should we say, ‘You've worked hard and paid hard. It's your pension, take it with our blessing?’” That reinforces the belief that we all have a contract based on the implication that the benefit you pay for, you are entitled to receive.
From the time it was conceived, the contributory system has been defined as insurance, with stated contributions and corresponding benefits. Changes over the years have reinforced the contract and enabled the government to accumulate a National Insurance Fund that currently contains an amount, in excess of immediate requirements, of £22 billion. This is the insurance fund for the benefit of both current and future pensioners. Yet Mr Gummer MP, former Minister for Agriculture (the one who made his daughter eat a beef burger during the BSE crisis in England), has suggested that National Insurance should in future be known as Earnings Tax, arguing that NI contributions are in reality another tax. This is an entirely incorrect assumption – NI Contributions are actually an insurance policy, with stated contributions and benefits and future liabilities, unlike taxation which is set to meet annual needs. However, and even more alarmingly, Mr Gummer’s bill also states that “the national insurance fund be merged into the general government funds”. That is, the National Insurance Fund will be swallowed up into the Treasury’s coffers and future pension payments will then be subject to the current government budget and “prevailing economic conditions”. The experience of ex-pat pensioners who retire to the government’s non-preferred countries should be borne in mind – they are told that they cannot receive the annual increase because “prevailing economic conditions” do not allow the government to allocate the money for such payments.
If Mr Gummer (and the Chancellor and Treasury) get their way, NI contributions will go into general taxation and pensions will depend on what the government decides to budget for “in the prevailing economic conditions”. Meanwhile, NI contributions (around 21 per cent of revenue collected by HMRC) will be used to fund all the waste identified by TaxPayers’ Alliance – Nigerian space programme; questionable overseas aid initiatives run by agencies paid by HM Government; Ministry of Defence incompetence; excessive public official expenses; bad ministerial decisions which lose billions of pounds of taxpayers money; a large number of irrelevant quangos and public service appointments; etc. etc. The list of government waste and inappropriate expenditure is endless.
Meanwhile, the Chancellor looks for every possible way to cut expenditure on social security costs, leading to an increase in poverty in the UK and among pensioners who retire abroad. This is evidenced by the growing number of people in Britain who rely on food parcels to survive; and on the ex-pat Brits who are having to return to the UK because they cannot survive on their frozen pensions, and so put more pressure on the NHS. But this is not just an attack on pensioners, for this government has shown just how it intends to reduce every social security beneficiary to a poverty level of existence. Unless Mr Gummer’s Bill is stopped now, every ordinary worker in the UK (the Conservatives always look after the fat cats) and their families will be increasingly worse off in the coming years, suffering the Conservative jibe, “It’s your own fault if you failed to save enough for your retirement” even though the government made sure you never had enough of your income left to be able to save.
It’s up to everyone. Harass your MP – he or she is elected to look after your interests; badger your union or even better - join a union that supports your rights to a reasonable lifetime return for your labour and security in retirement; complain to any newspaper that will print your letter; talk to any official – church or state – that might carry your message forward. The message: “Don’t mess with the pensions for which we pay and which we expect to support our retirement!”
You can fight now – both overtly as described above and in next year’s election; you will not have the power to fight when you become a vulnerable pensioner!
Clive Walford; Chairman of PPiI (Pension Parity in Indonesia. Clida@yahoo.com