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Speaking up on pensions – The future of our nation
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The pensions crisis is a time-bomb which has been steadily ticking for years. Index linked, non-contributory schemes for civil servants and those in public service are simply unsustainable.
In the private sector, many people find that saving for retirement is simply not economically viable. The blame can be laid at the feet of the current government, and to a lesser extent the Conservatives in the 1990s.
1. Since 1997, Chancellor Gordon Brown has taxed dividends, taking £5.5 billion per year and discouraging people from saving.
2. Ill-conceived accounting regulations in the 1990s prevented overfunding at the time, which means that extra money is now not available where needed
3. A guaranteed minimum income in retirement may seem like a good idea in principle. But for anyone on low earnings, they are simply throwing money down the drain if they save for retirement.
4. Withdrawal of tax credits on ISAs means that we now have virtually no tax incentives for savings of any kind.
So what is the solution?
The government must start to encourage people to save once again.
We need to move away from the idea of means-testing pensions. Replacing the guaranteed minimum income with a fairer basic pension would be a start. Tax incentives are needed to encourage people to save for their own retirement.
UKIP’s election manifesto states "The UK Independence Party believes that pensioners deserve a share of the Independence Dividend of cash that will flow from Britain's withdrawal from the European Union and we propose to raise the universal state pension by £5 per week. In addition, we recognise the hardship that some elderly people are enduring as a result of a shortage of funds for residential care, and we respect those who wish to remain living in their homes but cannot afford the necessary care. We have therefore allocated a sum of £0.5 billion to assist in these two areas"
"Many people in Britain are already members of private occupational pension schemes, or have taken out personal pension policies. This has partly been a response to tax incentives which the present government has largely withdrawn, but the UKIP would restore. This has placed Britain in a far better position than several other EU countries. There is little private pension provision in Germany and Italy, for instance, and so the pension 'overhang' in these countries is much greater than in the UK. It is widely acknowledged that these unfunded pension liabilities will become a serious burden, and this is a concern for Britain as a member of the EU because of the likelihood that we shall be obliged to assist through the EU budget."
With increasing life expectancy and an ageing population, society cannot afford to ignore this issue any longer. Stealth tax raids on pension funds may be profitable for the government in the short term, but it is the future of the nation that they insist on jeopardising.
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