Legislation should be passed during the next Parliament so that pensions are tied to average earnings
The link between state pensions and average earnings was scrapped in 1980 by Margerat Thatcher's Conservatives. Since then, Pensions have been in-line with inflation and as the rate of earnings increases at a greater rate than inflation, the state pensions are not what they once were; it is now estimated that 2.2 million pensioners are living below the poverty line. All of the political parties have announced that they are commited to to re-establishing the link between pensions and earnings, yet with the current state of the public purse how viable will this promise prove to be?
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The current pension system doesn't support the retired enough
The current state pensions system doesn't provide enough for the retired to live comfortably on. Those living on a basic state pension with no other income are technically living below the poverty line. It is estimated that 2.2 million pensioners are living in such a way. It is a disgrace that this is happening and an immediate overhaul is needed to ensure that no-one lives in poverty when they are retire. The risings cost of living compared to the rate of inflation means that the pension provided is not comparable to the needs of survival for many. The Liberal Democrat Colin Elridge states that "no pensioner should have to live in poverty".[[http://colineldridge.org.uk/news/000025/bring_back_link_between_pensions_and_earnings_say_lib_dems.html]] Therefore an immediate re-introduction of earning based pensions is needed to ensure that this is the case.
These pensioners may be living below the average standard of living, for working people, but need we forget that they are not working? Why should non-workers, who have not saved, have the same standard of living as those who are working? Bearing in mind, that our living standards have drastically increased and pensioners probably still feel better off now than they did 50 years ago when they were working and had children to bring up! We need to stop looking at the statistics as the whole picture and take into account societies developments.
A minimum pension is not the only answer to ensuring that older people have a decent quality of life. Encouraging and allowing them to work longer would be effective as well. This would require a change in the bias against older workers. Also if the state provided healthcare and homes free of charge then all pensioners could be ensured a decent quality of life without any potential problems of getting into debt and having to care for themselves.
Neither Conservatives or Labour are against restoring the link
Both main parties are committed to restoring the link between pensions and earnings at some point. The only question they have is whether it can be afforded and when. If the country cannot afford to recreate the link then it would not be sensible to just go ahead without looking at the other things such a cost would affect. Instead the conservatives want to be flexible. If the country can afford it they will restore the link in 2012, within the next parliament, however if we can’t then it will wait until 2015, which could mean the parliament after.[[ http://www.pensionsadvisoryservice.org.uk/news/2009/september/tories-would-defer-state-pension-earnings-link%5D%5D
Earnings rise so why should pensions not?
Like it or not a state pension is the only source of income for many retired people. To be fair to these pensioners there needs to be a link to incomes. Restoring this link would mean that pensioners are no longer getting constantly poorer compared to the rest of society and would not be at the mercy of interest rates and inflation.
There are however two sides to this coin. We are also living longer so it makes sense that the retirement age should be rising too. This would help to pay for the link between earnings and pensions and would make the most of people who can still be productive. The age at which people will receive their state pension is due to rise from 65 to 66 by 2026, to 67 by 2036 and 68 to 2046 and it is likely that either party may decide that it is worthwhile either going further moving the age at which the state pension is received up towards 70 or make the rise to 68 quicker. [[Paul Waugh, Millions will work until 68 for state pension say tories, London Evening Standard, 23/9/09, http://www.thisislondon.co.uk/standard/article-23747689-millions-will-work-until-68-for-state-pension-say-tories.do%5D%5D
It will cost too much to restore the link in the next parliament
It is clear that the current link between pensions and inflation doesn't go far enough in looking after those that have retired. But to re-establish the link between pensions and average earnings in the next parliament would be very expensive. With the Conservatives and Labour both agreeing that hard look needs to be taken over the state of public finances, and with both looking at ways to cut state spending, moving forward with re-establishing the link in the next parliament could be premature. Lord Mandelson described the need to 'prioritise and economise'. It is estimated that renewing the link will cost £600 million by 2012, £1.9 billion a year by the end of the next parliament, and £4.5 billion a year by 2050[[ http://www.independent.co.uk/news/uk/politics/tories-target-state-pension-in-battle-to-balance-books-1787328.html%5D%5D. While I agree that the pensions system needs to change it isn't economically viable immediately.
The fact that this would be an expensive move is something that we cannot allow ourselves to worry about. The additional money that would be provided to pensioners when the link is restored is money that they are owed, and money that they should have been receiving since 1980 when Thatcher's Conservative Government scrapped the link with average earnings. Since then, average earnings have increased faster than the cost of living, with pensioners finding themselves left further and further behind in the 'sharing out of the wealth of the nation'[[http://www.seniorsnetwork.co.uk/campaigns/restore.htm]]. If it is considered that the previous hard work of pensioners in the UK has been crucial to our continued economic strength, then it is only right that we provide them with pensions that are relative to the nation's current economic success.
The massive amounts of taxpayers' money wasted by the Labour government (and supported by the Tories), including illegal wars, MPs expenses, trident and the ID card scheme must be taken into account when these parties say it is too expensive to give pensioners a fair deal.
What do you think?