Means-testing
hits pensioners
By
Phillip
Inman, John Carvel and Rupert Jones
The Guardian, November 20, 2002
A leading
pensions charity has warned the government it risks increasing pensioner
poverty amid reports of poor take-up of means-tested benefits.
The study,
commissioned by Age Concern, was published as workers at a failed steel
company receiving a fraction of their pensions consider legal action
against the government. The case could open the way to many other, similar
claims.
The Age
Concern study revealed that the pension system failed to provide a decent
standard of living for half of pensioners. The charity said this situation
would persist if ministers relied on means-tested benefits to boost
retirement income because the benefits acted as a tax on savings,
discouraging workers from planning for old age.
The charity's
director-general, Gordon Lishman, said the government needed to raise the
basic state pension rather than press ahead with changes to means-tested
benefits.
"Our
pensions system simply isn't working. Too many older people today are not
reaching decent incomes in retirement and the position for future
pensioners is uncertain."
Pensioners
are also failing to claim benefits worth up to £1.9bn a year because they
are confused by the "mind-numbing complexity" of the system, the
national audit office said. In a report on pensioner poverty, it said tens
of thousands of pensioners are entitled to receive an extra £1,000 a year
but do not claim because they fail to understand the benefits available or
do not like to ask for means-tested support.
The NAO found
between a quarter and a third of the 2m pensioners entitled to the minimum
income guarantee missed out. A third do not claim council tax benefit and
10% of those entitled to housing benefit do not ask for it. Those claiming
such benefits are £22 a week better off on average. Many spend the money
on essentials such as nutritious food, heating or transport that
non-claimants forgo.
The NAO said
the Department for Work and Pensions was not doing enough to encourage
pensioners to claim. Estimates suggested 770,000 pensioners under-claimed
in 1999/2000, compared with 760,000 when Labour came to power in 1997/8.
Yesterday
newspaper publisher Trinity Mirror announced it would be joining more than
half of employers in closing its final salary pension scheme to new
entrants. The employer had seen its pension contributions almost double
from 6% to 11%, with the expectation of a further rise to maintain the
fund.
Lawyers at
steel union ISTC, representing workers at ASW, were yesterday examining
whether it could mount a case following claims by Plaid Cymru that the
government is in breach of European law by failing to fully implement a
directive on insolvency and the impact on employees. Campaigners say the
ASW case highlights a flaw in the pensions system which means workers can
see some or all of their entitlement snatched away if their company fails.
The employees
at Wales and Kent-based ASW are victims of rules giving priority to those
who are receiving their pension when a company goes into insolvency. Their
pensions must be paid in full and workers must make do with what is left.
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