Article For Kentish Express

6 October 2003

Pensions have been in the news this week.

On Monday the Government’s new Pensions Credit came into effect. And at the Conservative Party Conference at Blackpool our Pensions spokesman, David Willetts, put forward our own proposals for restoring the link between pensions and earnings. Many pensioners will be confused by these competing policies. Let me try to explain.

First, the point of agreement. Both the Government and the Conservative Party think more should be done to help pensioners. As I have said many times before we owe those who came before us an enormous debt. They have made great sacrifices, in war and peace, and we must honour and acknowledge that debt.

Where we disagree is on the best way to help pensioners. The Government’s new policy is means tested. If you want it you have to apply. Whether you get it and how much you get depends on your income.

We know from experience of similar government schemes that many of those most in need will not apply, deterred by the complications of the process. Indeed the Government itself is expecting large numbers of pensioners to go without the extra money for several years.

One major disadvantage is that this way of helping pensioners discourages saving. The message it delivers is: “The more you save, the less you’ll get.” It is one of the reasons why the amount people save has more than halved since Labour came to office.

So we think there’s a better way. We will restore the link between pensions and earnings and the increases will go to all pensioners so if they do save they know they will get the benefit of all their savings rather than have it taken away from them. Most will be better off and no-one will lose out. We shall keep the pension credit until no-one has to be means-tested.

Our scheme has been carefully costed. We have explained in detail how it will be paid for. This will be partly because fewer people will have to be means tested to get their benefits since their incomes will be higher and partly because we will abolish the New Deal which has been an expensive failure.

These issues always seem complicated. But they matter to millions of people. We are determined to give them a fair deal. They deserve it.