1.2 The UK is one of the world’s richest economies, yet 66% of our pensioners live in poverty.

1.3 Half a million pensioners don’t receive the benefits to which they are entitled. The new Pensions Credit will make maters worse, bringing half of all pensioners into means testing.

1.4 The current state pensions arrangement is flawed. Pensions Credit will do nothing to relieve disparities relating to age, income, and gender.

1.5 The government’s proposal to offer a £30,000 lump sum at age 70 to people who don’t retire until that age is a trick. It encourages people to gamble on their longevity, just to save the government money. It could mean cheating pensioners out of £11 billion.

1.6 Since the link was broken between pensions and earnings the concept of the state pension has changed from one of civic entitlement to one almost of charity handout. Society has gone backwards in this respect.

1.7 Now is the time to go forward. The Green Party’s pension proposals would end means testing, and would increase the basic state pension by 30%, or £23 a week. That’s progress.

2.1 The current system relies on a mixture of means-tested state benefits and private pensions, with a "Minimum Income Guarantee". The problems with the current system are:

1. Pensioners are financially penalised for having savings or private income.
2. Women are disadvantaged because they are less likely to have been continuously paying National Insurance contributions.
3. The system disadvantages those who have not been wealthy enough to pay into private pension schemes.
4. Due to means testing, and the complexity of the system, up to a third of eligible pensioners don’t claim the full benefits to which they’re entitled.

1. Pensions Credit will involve the biggest extension of means testing since World War Two.
2. Pensions Credit is even more complicated than the present system.
3. Pensions Credit will still leave women at a disadvantage.
4. Pensions Credit still penalises those with savings or another income, albeit to a lesser extent than at present.
5. Pensions Credit retains the idea that a state pension is almost a charitable handout rather than the civic entitlement which a state pension ought to be.

3.1The government wants to introduce a new scheme to offer a £20,000 lump sum to people who stay in employment up to age 70. Anyone who does so, of course, will be paying tax for those five years, as well as missing out on their pension. And of course, some of those who stay in work after 65 will die before they reach age 70, and never benefit from either their pension or their lump sum. If the government manages to persuade everyone to stay in work until they are 70, pensioners will be cheated out of almost £11 billion altogether.

3.2 Under current circumstances, the government would pay £10.13 billion for the full state pension over five years. Imagine if everybody aged 65 decided to stay in work until age 70 in return for a £30,000 lump sum, the government would have to pay out £15.1 billion in lump sums. But it would have gained £15.8 billion in the tax that those people would have paid during that time because they had remained in work. So the government would be £0.7 billion better off.

4.1 The Green Party proposes that we abolish the tax relief that is currently given for contributions to private pension schemes. Doing so would save £13.2 billion a year. This money should go straight into increasing the basic state pension. It would work out at £23 per pensioner. With a basic state pension of £77, this would represent an increase of 29.87%. It would bring the basic pension up to £100 a week – with no means testing.

4.2 The reason for this proposal is this: it means the general taxpayer – or society as a whole - is subsidising that section of society which is already sufficiently well-off to pay into private pension schemes. The Greens believe Labour is doing this for the cynical political motive of wooing the "Middle England" voter. The Greens would instead take the principled stance that society should support those who most need support. This pension policy is part of the Green Party’s wealth redistribution agenda.

EC800. Pensioners deserve a state pension which is sufficient to cover their basic needs and to enable them to live with dignity as of right, without the need for additional means tested benefits. The Green Party will immediately introduce a Citizen's Pension to replace the current basic state pension and any additional top-up benefits. The Citizen's Pension will be initially set at a level no lower than the current minimum level of income then guaranteed by the government for pensioners, so that nobody will be in a position that they receive less through the system than they were entitled to under the previous state pension and top-up benefits system.

EC801. The Citizen's Pension will replace an individual's Citizen's Income once they reach the specified pension age. This will not restrict an individual's right to continue working, and any additional earnings will be taxed just as they would for those below the pension age. Unlike the current system these payments will be unconditional, given as a right of citizenship and not subject to means testing. They will not be restricted to those people who have paid National Insurance contributions, which, for example currently leaves many women without a proper state pension due to having an incomplete payment record.

EC802. The Citizen’s Pension will be set at a higher level than the Citizen's Income. It will be up-rated annually in line with the increase in either a) the price of basic goods and services, or b) average earnings, whichever is greater. There will be a supplement paid to pensioners living alone as well as for those with disabilities and special needs. This will include payments to cover the costs of residential care, should this become necessary. Elderly residents will no longer be forced to sell their homes in order to pay for such care, as these supplements will not be subject to means-testing.

EC803. As with the Citizen's Income, housing benefit will initially continue to be paid. The situation will subsequently be reviewed to see how a housing cost element could be incorporated into Citizen's Pension payments (see EC733).

EC804. The Green Party recognises that people in paid employment may wish additionally to defer some of their income until the time that they retire, in order to ensure that their standard of living does not dramatically reduce when their employment ends. The usual method of doing this at present is to make contributions to privately administered pension schemes, which then invest those contributions in shares on the Stock Exchange.

EC805. Although we do not envisage an end to the Stock Exchange, its future role in a green society will be significantly reduced as legislation is brought in to reduce the size of inappropriately large companies whose stocks are currently listed (see EC651). Concern that company decisions are made by those stakeholders most affected by them, rather than by distant shareholders who only hold a speculative financial interest, also means that it is inappropriate for the Government to promote or encourage such investment in private pension schemes. Moreover, there have been significant problems with private sector schemes in recent years, including mis-selling and fraud, and this is coupled with the inherent uncertainty of returns from funds invested on the Stock Exchange to leave those who have contributed to additional pension schemes with far less financial security than they had hoped for.

EC806. It is therefore necessary to introduce publicly administered pension schemes which will enable people voluntarily to provide for their retirement without recourse to the current private pension providers. People will be able to contribute to a national additional scheme in which they will get fixed rate pension investment bonds in return for their contributions. They will also be able to invest in Local Community Pension Schemes, which would be administered by local authorities/community banks and would re-invest the money paid into them within the local community. These could offer the options of either fixed rate local bonds, or an equity-based scheme which would give variable returns from investment in appropriate local businesses which satisfied various criteria concerning environmental and social standards. Those who have contributed to such publicly administered pension schemes should receive an annual statement detailing the current value of their pension fund, and an estimate of the future level of an annuity purchased

by that fund on retirement.

EC807. Stakeholder pension legislation will be amended so that employers need only offer entry into such publicly administered schemes. There will no longer be any tax relief for contributions to additional pension schemes, whether privately or publicly administered. It would still be possible to use the accumulated pension fund to buy an annuity, but no longer compulsory to do so. A publicly run annuity scheme would be set up to offer a secure alternative to those which are privately run. Income received from annuities, whether public or private, would no longer be taxed on receipt.

EC808. Where companies run an occupational pension scheme, the scheme must only be run for the benefit of workers, former workers and pensioners whose representatives must form a majority on the Board of Trustees. We would immediately ensure that changes to existing occupational pension arrangements could only take place with the agreement of the affected workers, former workers, existing pensioners and their representatives.

Census 2001 population Persons (ONS)

Age 65 = 547,286

Age 66 = 530,226

Age 67 = 507,487

Age 68 = 505,819

Age 69 = 506,025

Total aged 65-69 = 2,596,943

Total outlay by government paying pensions for these people over 5 years @ £75 per week:

2,596,943 ´ 75 ´ 52 = 10.13 billion

Died 65-70 = 43705

Aged 70 = 503,581

If government give 30,000 to all at age 70 then their outlay is:

503,581 ´ £30,000 = 1.51 x 10¹⁰ or £15.1 billion

But if these people were working instead of claiming pension they would also be paying tax:

We calculate this on the basis of average salary of £24,603 a year, at current rate of NI of 10% and standard tax rate of 22%, with single person’s tax allowance of £4615.

Gross pay per person £24,603

NI £2,044

Tax @ 22% on £19,988 £3,998

Total contribution to government £6,042

Total gained by government for people remaining for the 5 years (assume half live for whole period):

Tax in year 1: £3.3 billion

Tax in year 2 (minus people who die in year 1): £3.2 billion

Tax in year 3 (minus people who die in year 2) £3.1 billion

Tax in year 4 (minus people who die in year 3) £3.1 billion

Tax in year 5 (minus people who die in year 4) £3.1 billion

Total tax gain £15.8 billion

Total outlay under present conditions (full pension) £10.13 billion

Total outlay for bribe at age 70 £15.1 billion

Extra tax revenue £15.8 billion

Government saves cost of pension over 5 years and gains £10.83 billion

Total relief on approved pension schemes 2002-3 (1) 13.2 billion

Number of pensioners at February 2002 (2) 11.14m

Amount available per year 1184.91

Amount available per week 22.79

You'll see it is very close to the £25 called for by Rodney Bickerstaffe.

If you add in the NI exemption for employer contributions the sums looks like this:

Total relief on approved pension schemes 2002-3 (inc. NI) (1) 17.7 billion

Number of pensioners at February 2002 (2) 11.14m

Amount available per year 158.87

Amount available per week 30.56

1. Source: Inland Revenue, Facts and Figures, Table 7.9 Approved Pension Schemes: Cost of Tax Relief.

2. Source: Department for Work and Pensions, Retirement Pension Summary Statistics, 14 February 2002.

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