Terry Heath, secretary of the South West TUC Pensioners Forum, argues that Labour must link pensions to earnings.
Eighteen years of Conservative government had a major impact on pensioners. One single action has had more impact on pensioners than any other: the breaking of the link between wages and pensions. While continuing to collect contributions at a rate depending on wages earned, pensions were paid at rates linked to the RPI or the rate of whatever they decided was the inflation rate. Consequently pensions have reduced by 20% in value -- around £30 per week for a couple. It is the prime objective of pensioners' organisations to get the link restored.
Labour promised a complete review of pensions and has indeed kept this promise and invited representatives to attend. The TUC, the National Pensioners and the British Pensioners Action Association have taken up the invitations. During review meetings it has become clear that Labour has no intention of restoring the link. New Labour continues the Tory practice of invoking scare figures that wildly overestimate the cost of pensions. Professor Peter Townsend and others have shown conclusively that New Labour's estimates are wrong.
Three other Tory measures have impoverished pensioners. First, the privatisation of utilities. In the South West the water companies have levied three-fold increases in water and sewerage charges. Pensioners have had to pay or be cut off. Why should a pensioner in Devon pay three times as much for a gallon of water than a millionaire in Surrey? Labour will not reclaim control of these companies.
Second is the decline of the NHS. The Labour Manifesto noted that 200,000 were waiting on orthopaedic lists, 8,000 for over a year. These figures would be cut by efficiency measures. What has happened? More and more hospitals are closed with elderly patients transferred so far from their homes that their elderly friends cannot visit. While local hospitals struggle to provide beds to meet other demands, elderly patients are placed in homes with entirely inadequate resources as Social Services is without the funds to provide home assistance unless the patient can afford £5 per hour. A referral case classed as high priority can wait eight months before seeing an occupational therapist who may be able to provide items to ease the problems in the home.
Third, is fuel costs. There has been some easement of the VAT burden but the Government should do more. Only a strong protest and pensioners' rally prevented a rise to 17.5% under the Tories. After six review meetings -- where all the problems of health and finance have been raised -- the only easement has been a publicity stunt involving a fuel cost sum of £20 that was means tested and remains unpaid. Pensioners have had to meet their ever increasing heating bills in the meantime.
The first New Labour act on pensions was to skim off a few billion in a raid on the pension fund assets by changing the funds' tax free allowances. Despite Government protestations, the inevitable effects will be that pensioners can no longer look to better payments and improvements on fringe benefits and secondly, more of the input from present payers will provide them with less benefits on retirement. After more than 40 years contributions today's pensioners are given less than a third of their previous working wages.
For tomorrow's pensioners, there are two clear messages to be understood. While they continue to pay contributions at the same rates, their state pension will be means tested in the future. They have the alternative of starting a private pension by paying into the same insurance and life companies that have ripped off pensioners for years and continue to blatantly ignore all the Ombudsman's pleadings and fines for pension mis-selling.
To obtain a pension approaching half pay or even reach Treasury limits, the contributions must average at least 16% of wages if the pension is to be based on a "final wage" scheme. With employers threatening to close funds if forced to contribute, tomorrow's pensioners have no option but to hand over money to the biggest thieves in the finance business.
The Government continues with the identical confidence trick of the Conservatives, a scare story that pensions cannot be paid out on the present basis due to a future population explosion of the elderly. In fact pensions paid now are a smaller percentage of GDP than when they started. The Pensions Review is a delaying tactic while the Government prevaricates and persuades through repetition of false figures that your future is safe in their and the insurance companies' hands. If you believe that...
National pensioner's rally, Central Hall, Thursday 26 March, 11am, followed by lobby of Parliament, from 2 pm.
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