Pensions Bill

Written evidence from the Civil Service Pensioners’ Alliance (PB 19)

ABOUT THE CIVIL SERVICE PENSIONERS’ ALLIANCE (CSPA)

1. The Civil Service Pensioners’ Alliance (CSPA) campaigns on behalf of the 500,000 civil service pensioners in the UK. The CSPA has approximately 60,000 members organised into 100 local groups with membership drawn from all grades and all Departments of the Civil Service and related bodies. The CSPA is recognised by the Cabinet Office as the representative organisation for retired civil servants.

2. As well as pensions, the CSPA lobbies and campaigns on a wide range of issues of concern to older people, including health, social care, transport and social inclusion and works closely with other organisations that represent older people.

3. We would be delighted to provide further information to the Committee if appropriate.

1. INTRODUCTION

1.1 On 14 January 2013 the Government published a White Paper setting out its plans to introduce a new single-tier State Pension. Shortly after, on 18th January 2013, a Draft Pensions Bill was published setting out the legislative changes which would be needed to implement the reforms. The Work and Pensions Select Committee conducted pre-legislative scrutiny of the single-tier State Pension elements in the draft Bill, publishing its report on 4 April 2013.

1.2 The Government published the Pensions Bill 2013/14 on 10th May 2013. It will reform the State Pension system (the single-tier pension) affecting new pensioners from April 2016 at the earliest.

2. SUMMARY

2.1 The Alliance believes that the introduction of a single tier state pension provides a solid basis for reform. These changes should make it easier for people to plan for their retirement by providing greater clarity about the level of support people can expect to receive from the state.

2.2 However despite our broad support for the Bill we are concerned about the exclusion of existing pensioners from the Bill. We accept that there are considerable practical barriers to assimilating the current arrangements for existing pensioners into this new single-tier system; however, there is great concern amongst current pensioners that the Government has, by excluding them from this new legislation, ruled out future improvements in the existing State Pension arrangements.

2.3 We also have concerns around:

· The Level of the Single-Tier State Pension – Part 1

· Changes to State Pension age – Part 2, Clause 25

The Level of the Single-Tier State Pension

2.4 Part 1 of the Bill will create a "new flat rate pension set above the basic means test to replace the current two-tier system of basic State Pension and earnings-related additional State Pension, to be implemented from April 2016".

2.5 Whilst this is a welcome simplification, we believe that the level the single-tier pension has been set at, approximately £144per week for a single person, is too low. This is just above the current Pension Credit or Minimum Income Guarantee of £142.70pw.

2.6 The Alliance believes that the target for the flat rate basic state pension should be set at approximately £176 per week, based upon the Joseph Rowntree Foundation’s calculation of 60% of the Minimum Income Standard (MIS). The Minimum Income Standard (MIS) is the income that people need in order to reach a minimum socially acceptable standard of living in the UK today, based on what members of the public think. [1]

Changes to State Pension Age

2.7 We have concerns about the provisions in the Bill to bring forward by 8 years the increase in the State Pension age of 67. This will now take place between 2026 and 2028 (Part 2, Clause 25). Previously, the state pension age was due to increase to 67 between 2034 and 2036.  

2.8 Whilst the CSPA supports periodic reviews of the pensionable age (Part 2 Clause 26), we are concerned that these proposals fail to reflect the good practice guidance of the 2005 Turner Commission. Turner recommended that those affected by any future increases in the state pension age should be given a minimum of seven years notice to allow them to adequately prepare for their future.

2.9 We urge the Government to reconsider the timetable for these changes to reflect the needs for those approaching retirement, and enable them to adequately plan their future.

3. WIDER POLICY IMPLICATIONS

Abolition of Pension Credit

3.1 A key corollary of the introduction of the new single tier state pension will be the abolition of Pension Credit. Whilst this simplification of pensions is to be welcomed, the Alliance is concerned about how the pass-ported benefits that currently accompany a claim for Pension Credit (such as Housing Benefit and Council Tax Benefit) will be made available to recipients of the new single-tier pension. We are keen to ensure that this process is clarified to ensure that new pensioners do not lose out on the benefits of automatic pass-porting which currently exist in the pensions system.

3.2 With the abolition of Pension Credit and other means tested benefits from 2017, it is clear that the means-testing framework for current pensioners will need to be re-designed to deal with the decreasing number of pensioners using these services and the likelihood that their circumstances are more complex than ever. The CSPA urges the Government to ensure that a suitable administrative function is retained beyond the introduction of the new single-tier pension in 2017 for current pensioners who will continue to claim means tested benefits.

June 2013