[A-List] UK legitimation crisis: pensions

["Michael Keaney" <michael.keaney@xxxxxx>]

Means-testing hits pensioners

Phillip Inman, John Carvel and Rupert Jones
Wednesday November 20, 2002
The Guardian

A leading pensions charity has warned the government it risks increasing
pensioner poverty amid reports of poor take-up of means-tested benefits.

The study, commissioned by Age Concern, was published as workers at a failed
steel company receiving a fraction of their pensions consider legal action
against the government. The case could open the way to many other, similar
claims.

The Age Concern study revealed that the pension system failed to provide a
decent standard of living for half of pensioners. The charity said this
situation would persist if ministers relied on means-tested benefits to
boost retirement income because the benefits acted as a tax on savings,
discouraging workers from planning for old age.

The charity's director-general, Gordon Lishman, said the government needed
to raise the basic state pension rather than press ahead with changes to
means-tested benefits.

"Our pensions system simply isn't working. Too many older people today are
not reaching decent incomes in retirement and the position for future
pensioners is uncertain."

Pensioners are also failing to claim benefits worth up to £1.9bn a year
because they are confused by the "mind-numbing complexity" of the system,
the national audit office said. In a report on pensioner poverty, it said
tens of thousands of pensioners are entitled to receive an extra £1,000 a
year but do not claim because they fail to understand the benefits available
or do not like to ask for means-tested support.

The NAO found between a quarter and a third of the 2m pensioners entitled to
the minimum income guarantee missed out. A third do not claim council tax
benefit and 10% of those entitled to housing benefit do not ask for it.
Those claiming such benefits are £22 a week better off on average. Many
spend the money on essentials such as nutritious food, heating or transport
that non-claimants forgo.

The NAO said the Department for Work and Pensions was not doing enough to
encourage pensioners to claim. Estimates suggested 770,000 pensioners
under-claimed in 1999/2000, compared with 760,000 when Labour came to power
in 1997/8.

Yesterday newspaper publisher Trinity Mirror announced it would be joining
more than half of employers in closing its final salary pension scheme to
new entrants. The employer had seen its pension contributions almost double
from 6% to 11%, with the expectation of a further rise to maintain the fund.

Lawyers at steel union ISTC, representing workers at ASW, were yesterday
examining whether it could mount a case following claims by Plaid Cymru that
the government is in breach of European law by failing to fully implement a
directive on insolvency and the impact on employees. Campaigners say the ASW
case highlights a flaw in the pensions system which means workers can see
some or all of their entitlement snatched away if their company fails.

The employees at Wales and Kent-based ASW are victims of rules giving
priority to those who are receiving their pension when a company goes into
insolvency. Their pensions must be paid in full and workers must make do
with what is left.