Despite an exceptionally tough economic climate, the Coalition Government has made support for pensioners a clear priority.

Britain used to have a pensions system to be proud of. However, due to thirteen years of neglect and inaction we are left with a situation that has become unsustainable. The Pensions Commission has described our set up as one of the most complex and difficult in the world. A departmental survey on attitudes to pensions found that barely one in four people agreed that “they knew enough about pensions to decide with confidence about how to save for retirement.”

Worse still, few people have a clear idea of what their state pension will be worth when they retire and for a selection of broad groups – particularly women, the low-paid and the self-employed – it can produce unfair outcomes. Critically, the current system actually discourages some people from putting anything aside: mass reliance on means-testing leaves people unsure whether they will benefit from the savings they make.

The Government’s objective is to guarantee a decent State Pension for future pensioners which is easy to understand, efficient to deliver, fair and affordable. It must provide a firm foundation for workplace saving and a secure income in retirement.

Radical change, therefore, is long overdue. The recent Green Paper, A State Pension for the 21st Century, sets out two options for reform, neither of which involves spending more money on future pensioners than has already been forecast through the existing system. The key is to use the resources we already have better and spend tax-payers hard earned money in a more targeted way.

It is true that these arrangements could take several years to deliver. However, this is a not unreasonable reflection of the scale of the reform and the importance of getting it right – both in theory and in practice.

Nor is it valid to suggest that this Government has discriminated against existing pensioners. At the earliest opportunity we introduced the triple guarantee. This change alone means that someone retiring today on a full basic state pension will receive £15,000 more over their retirement by way of basic State Pension than they would have done under the old prices link. Key areas of support – including free eye tests, free prescription charges, free bus passes and free TV licenses – have been protected and Cold Weather Payments permanently increased to £25 a week. This resulted in over £400 million being paid out during the winter of 2010/11.

Having taken action to support current pensioners, it is time to turn to the next generation. Tomorrow’s pensioners face a different world in retirement. They will live longer and have to work longer, they are much less likely to have generous defined benefit pensions and will experience lower annuity rates. It’s only right that we make the system work for them.

Furthermore, it should also be made clear that, under any reform, the State Pension will continue to be based on people’s National Insurance contributions record.

Even the Labour party have welcomed our proposals – agreeing on the need for a ‘more progressive and less complicated system’. Yet, despite over a decade in office, they could not deliver one.

Never forget the £150 billion stealth tax on private pensions introduced under the previous Government. Described as the ‘biggest attack on pension provision since the war’, in 1997 Gordon Brown abolished the Dividend Tax Credit paid to pension funds and companies. This meant that pension funds were no longer able to claim a tax credit on the payment receipt of dividends.

Ros Altmann, a former pensions adviser to Tony Blair, commented that Mr Brown ‘knowingly destroyed what was once one of the great pension systems in the world and he did it deliberately.’

Finally, I must emphasise that these proposals remain at the consultation stage. The Government is seeking as many views and contributions to the debate as possible and I would urge all interested parties to get involved by visiting the DWP website (

Yours sincerely


Bill Wiggin MP