Warning over 'discriminatory' pensions

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Warning over 'discriminatory' pensions

The Guardian

January 9, 2004

Peers today called for a major shake-up in state pensions, claiming that the current system discriminates against women and ethnic minorities.
The government should replace the basic state pension with a non means-tested citizenship pension, which depends upon years of residence, rather than on national insurance contributions, according to an all-party group of peers.

The Lords' economic affairs committee inquiry into Aspects of the Economics of an Ageing Population found that the current state pension system is failing many women and ethnic minorities who are most vulnerable to poverty in old age.

Ministers are asked to urgently investigate the option of providing a decent non-means tested basic citizenship pension, based on years of residence rather than on full contribution record.

Most pensioners are women, yet they are more likely than men to be poor because they live longer, are paid less at work than men, have fewer years in employment because of child care responsibilities and fewer opportunities to join an occupational pension scheme.

The report warns: "Many women pensioners and older women workers have relied on their husbands/partners to make appropriate pension provisions.

"The financial position of this group needs to be protected, even as pension provision for the future shifts over to an individualised basis.
"We believe that our recommendation of a shift to citizenship- based entitlement will do much to protect and enhance the interests of current women pensioners ...

"A citizenship pension will also serve, to some degree to protect the income in retirement of divorced women but the impact of divorce on pensions extends well beyond the scope of the state pension.

"The United Kingdom has the highest divorce rate in the EU and it is estimated that four out of every 10 marriages entered into in the United Kingdom in 1996 will end in divorce.

"Few retirees have yet experienced old age as divorcees, but the proportions are growing."

Peers also warn that the government's heavy and growing reliance on means testing is regrettable, as it taxes some of the poorest pensioners at marginal rates at least as high as those imposed on the rich.

Peers looked at pensions policy, the supply of labour, age discrimination and retirement age, and urged the government to act to combat a "bias against employing older people".

The Labour chairman of the committee, Lord Peston, said: "New laws on age discrimination in 2006 should help empower and encourage far greater participation of older workers.

"Nonetheless, a bias against employing older people and of appointing them to public bodies remains, this is economically inefficient and ethically unacceptable.

"It should be ended, and the government, in particular must take a lead."
Ministers are also urged not to permit the continued use of a normal retirement age by employers, whether at age 65, 70 or 75 unless the employer can provide an objective justification for the use of age rather than performance criteria in determining employability.

Overall, the report concluded that population ageing did not pose a threat to the continued prosperity and growth of the UK economy.
Lord Peston, said: "The UK has adapted well to challenges and opportunities posed by an ageing society."

Yet the population of the UK is ageing and in 2001 for the first time, there were more people aged over 60 than under 16.

In the mid-nineteenth century, average life expectancy for men was 42, today it is over 75. By 2051, an estimated one in four people will be aged over 65.