28 March 2012

Another benefit financed by defalcation

I see that those on pension credit (the means-tested supplement to the basic state pension), along with others receiving benefits, are to be able to buy a certain number of Royal Mail stamps at reduced prices.(Daily Mail, 28 March 2012.) The cost of this, including the cost of time spent by Post Office staff, will have to be borne by someone, presumably by those not on pension credit or receiving any other benefit, when next the prices of stamps are raised.

When pensions were declared to be means-tested this was effectively turning the state pension system into a ‘benefit’, instead of a payment made ‘as of right’ to those who had made the specified number of contributions.

It was on that basis – the payment ‘as of right’ basis – that I paid into the state pension system for over 40 years, without entertaining any fears of eventual means-testing. Being deprived of a salaried career and even of eligibility for the so-called social security on account of my ruined education, I had virtually no income and paid voluntary contributions to the state pension scheme to reduce, at least by a small amount, my disadvantage relative to salaried academics.

Even if the threat of means-testing had been bruited, I would have thought it unlikely to affect me, since, having no academic appointment, I had no other pension expectations and negligible income from any source.

Having finally qualified for the state pension, and still being without a salaried career, I was horrified and shocked to find that my pension was now to be means-tested and that I would not be eligible for the supplementary ‘pension credit’ even if I was prepared to apply for it as a ‘benefit’. This was because I had devoted all my attention to building up capital to provide myself with a roof over my head. If I had not bought the house I lived in, I would have had no income with which to rent one.

Now that the emphasis of the means-testing is shifting from income to capital, I find that I have too much of the latter to qualify for ‘pension credit’, since I was never able to depend on income and had to build up capital as best I could. I see that those on ‘pension credit’ are to be able to buy cheaper postage stamps, apply for cheaper energy on ‘social tariffs’ and no doubt in many ways spend less on fundamentals than if they were not on ‘benefit’, thus increasing their advantage relative to me.

At the same time, others of my unsalaried colleagues who have fully qualified for their pensions by making voluntary contributions, see them receding into a distant future, and expect them to be means-tested even when they start to be paid.

The question of ethics with regard to pension policy is one of the issues on which critical analyses could be being published by Oxford Forum if it were provided with adequate funding to do so. Meanwhile, the idea that it is 'fair' to redistribute from better-off to worse-off pensioners is likely to receive reinforcement from pseudo-research published by the universities.