The number of older people who will be forced to pay their own care bills will double over the next 20 years to more than a quarter of a million, a report said yesterday. It said spending constraints and growing demand for help will mean councils no longer provide any care apart from that which the law forces them to pay for. (Daily Mail, 30 May 2012)
A number of pensioners who are now struggling and suffering would not be, if the state pensions, for which they had qualified by paying the necessary contributions for up to 45 years, had not subsequently become means-tested.
In
The Great Pensions Swindle, the author describes exchanges in Parliament from which one gathers that there was a strong emotional investment in the idea of paying ‘benefits’ only to those in ‘real need’, that is, those who would not have their freedom increased by the payment, as it would all be accounted for by outgoings necessary for staying alive.
At the time (about 1970) this did not suit the Government’s book, as they needed to justify raising the contributions made towards pensions, so as to have more money available for their favourite forms of expenditure, such as salaries paid to doctors, teachers, social workers etc. for their activities in reducing the freedom of others. Therefore it was necessary to talk as if a person’s contributions were paying for a certain level of pension, in a way that was comparable to previous commercial schemes.
By now, post-means-testing, few people remember what went on, or impressions that were created, around 1970.
People do not complain that they were given no warning that means-testing might come about. Certainly I was acutely aware of the difference between a benefit and a pension paid ‘as of right’ when I made the efforts necessary to pay voluntary contributions over 40 years, being usually unsalaried and unable to draw income support.
But, it may be objected, most people are not making a deliberate choice about paying or not. They pay automatically because they have a job which involves compulsory national insurance contributions, and so they cannot complain if the government subsequently changes its mind about what it will pay, or at what age it will pay it. However, while it is true that they may not think about the deductions from their pay packet, and may acquiesce in what is considered a sensible thing to do, they always
might think about it, and do something else instead. And the consensus always might decide that salaried jobs with pension deductions were bad value, and it might become received wisdom that everyone should run a small business from home instead.
A fifth of workers are putting nothing into a personal pension, threatening poverty in old age. People are sacrificing saving for their retirement in favour of covering immediate bills such as mortgages, heating and food. The proportion of those who are saving the minimum needed into a personal pension to provide a comfortable old age has fallen to an all-time low of 46 per cent.
Pensions expert Scottish Widows ... said most people are hoping for a retirement income of £24,500 in order to provide a decent standard of living. (Daily Mail, 21 May 2012)
Various means-tested benefits are suggested, such as a few free stamps for Christmas cards, or going on a cheap ‘social’ tariff to be provided by energy suppliers. These would all involve an extra workload for salaried staff, who would need to interact with each applicant about the validity of his claim.
No one suggests that the pensions already paid for should be restored to a non-means-tested, and more realistic, basis. Discussing plans for a
future non-means-tested pension, the Scottish Widows experts give £24,500 p.a. as the amount that most people hope for on retirement to provide a decent standard of living.
The present basic (non-means-tested) state pension is less than £5,500 p.a., so that the gap is considerable. If the present basic pension were raised to, say, £20,000 p.a., a considerable number of pensioners could be relieved of extreme pressure, conceivably at less cost to the taxpayer than relieving the same number by complicated schemes to provide marginal relief with specific expenses, such as bus fares, Council Tax, heating, meals on wheels, etc.
But the reason that people do not like this idea is that some pensioners, who have other pensions, or a certain amount of capital, might have some money (i.e. freedom) left after the most basic expenses. And we know that the ‘fair’ society is one in which there is no freedom at all for anyone. The average voter, I expect, is far more interested in absolute fairness, in this sense, than in the cheapest method of providing for certain types of distress.