Posts Tagged ‘pensions’

What is Labour’s big idea? Put your pension into the next generation

17/08/2015, 01:50:55 PM

by Stella Creasy 

Labour has been a mass membership party in previous decades. But only when we have been a mass movement have we won elections and transformed Britain. Whether 1945, 1966 or 1997; at our best our members are messengers not just for changing the government but for changing lives.

In an era when so many find themselves alienated from the political process, to have so many want to join our cause is what some would call a high quality problem to have. The real problem is if we have nothing to offer in return for their time, energy and expertise. Whether people are from the left or the right of the party, all want being involved to mean more than a meeting or leaflet round.

The answer for us is not to make it harder for people to be part of Labour, or to waste the time of those who join, but to channel their energy towards common causes.

We should not let this wait for government but start now, and I want us to start with one of the biggest inequalities we face: inter-generational injustice.

Whilst the Tories try to divide Britain, let us be the movement that helps deliver inter-generational opportunity. With an army now 600,000 strong we can be a powerful voice for policies that will transform our country. In doing so we can show how Labour would make different radical and credible choices about the future direction of Britain.

Most agree that Britain is facing a housing crisis and a demographic challenge with an ageing population. With resources tight, the answer isn’t to compromise but to collaborate.


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Revealed: George Osborne’s secret £6.5bn tax raid on pensioners

20/03/2015, 11:17:26 AM

by Samuel Dale

Buried deep in this year’s dull Budget was a secret £6.5bn tax raid on pensioners and savers under the guise of radical reforms.

George Osborne’s most significant policy announcement was the proposal to allow pensioners already drawing an annuity to sell their policy in exchange for a lump sum.

It is the second stage in major pensions reform announced in last year’s Budget to allow all over-55s to access their pension pots.

The first stage of pension freedoms is relatively simple. The pension system saw savers build up a retirement pot of cash with generous tax relief on contributions. In exchange they had to buy a secure income or annuity (or face a punitive 55% tax if they withdrew their cash from the pension wrapper).

Annuities work as a reverse insurance product so you pay over a big chuck of cash to the insurer and in return they pay you money every month until you die. Insurers pool the risk so those who die earlier fund the payments for those who live longer than expected lives.

As people live longer insurers are paying a lower amount each month over a longer period, making pensioners buying them poorer. Successive Governments have taken steps to ease the requirement to buy an annuity by allowing wealthier investors to drawdown their own money.

But Osborne’s announcement last year, coming into force on 6 April, is the big bang. It means anyone can withdraw their pension pot at marginal income tax rates (although everyone receives an initial tax-free lump sum of 25%).

The Treasury estimates the behavioural changes will see individuals wanting the money today despite the tax penalties. It will lead to many savers paying income tax on withdrawals they have never paid before.

So how much does it cost?


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Where now for Labour on pensions?

11/04/2014, 11:12:39 AM

by Samuel Dale

It has been a chastening month for Britain’s pensions industry as regulators and the government have finally cracked the whip on its excesses.

In a series of policy announcements the government has launched a self-proclaimed “full frontal assault” on the industry. Pensions providers have entered the realm of banks, energy firms and politicians with a special place of distain in British hearts.

To tackle the problems, the government has ripped up the existing rules on annuities in the Budget sending insurers’ share prices south. It has imposed a 0.75 per cent cap on pension charges from next April and imposed full transparency of all costs.

And in a further blow to the sector the Financial Conduct Authority is launching a review into close-book pension funds to make sure savers are being treated fairly. Again, this sent insurers’ share prices tumbling.

No one can seriously accuse the government of bowing to vested interests in the pensions industry. They are at open war.

Former chancellor Nigel Lawson tells me the pensions industry is “the most powerful in the land” and he found it difficult to take on so this is no mean feat.

For Labour this creates a major political headache. Shadow pensions minister Gregg McClymont has been one of the most effective opposition ministers. He has a superb command of his brief and has made the political weather on pensions regularly.


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Friday News Review

29/07/2011, 06:24:12 AM

“A new low”

The News of the World hacked a phone belonging to Sarah Payne’s mother – which was given to her by then editor Rebekah Brooks, it was claimed yesterday. Scotland Yard have told Sara – mother of the eight-year-old schoolgirl murdered by Roy Whiting – that the mobile may have been targeted by the newspaper. They said they had found evidence suggesting she was hacked by News of the World ­investigator Glenn Mulcaire. Friends of Sara Payne said that she is “absolutely ­devastated and deeply ­disappointed” at the news. The newspaper – and particularly Rebekah Brooks – had championed Sara’s campaign for Sarah’s Law. Sara even wrote a column for the paper’s final edition, calling their staff “my good and trusted friends”. Labour MP Tom Watson said: “This is a new low. The last edition of the News of the World made great play of the paper’s ­relationship with the Payne family. Brooks talked about it at the committee inquiry. Now this. I have nothing but contempt for the people that did this.” –  Daily Mirror

I want you back

Labour MP Tom Watson said he would also call for ex-News of the World editor Colin Myler and the paper’s ex-legal manager Tom Crone to answer questions. Mr Murdoch told MPs he had not been “aware” of an email suggesting hacking went wider than a “rogue” NoW reporter. Mr Myler and Mr Crone have both disputed this. Mr Murdoch later said he “stands by his testimony” to the committee. Mr Watson told BBC Two’s Newsnight programme he would make the recall requests to the committee on Friday “so that we can get to the bottom of this, find the facts and Parliament can then move on and let the police do their inquiry”. The committee is due to hold an internal meeting, which will be closed to the public, on Friday morning. – BBC News

Lord Leveson sets out inquiry plans

The man appointed to lead the judicial inquiry into phone hacking and press standards last night warned newspapers not to “close ranks” but help him expose the “depth” of journalistic malpractice. In his first public comments since being appointed, Lord Justice Leveson said he intended to call “waves” of witnesses including journalists, politicians and policemen starting in autumn. He also warned that the expansion of the terms of reference of his inquiry had been so broadened that he might not be able to complete the first part of the inquiry within the planned timescale of a year. Lord Justice Leveson met for the first time formally with the other members of his inquiry panel yesterday and read a statement outlining the procedures and time-scale for the first section of the inquiry into the culture, practices and ethics of the press. The second section of the inquiry will look at the specific phone-hacking allegations that arose in the wake of the scandal at the News of the World but will only begin once police investigations have been completed. A series of seminars will be held in October looking at law, media ethics and the practice and pressures of investigative journalism for broadsheet and tabloid newspapers. – the Independent

“Die or go private”

NHS managers are deliberately delaying operations in the hope patients will either die or go private in a ‘callous’ attempt to save money, it was claimed yesterday.  Health service trusts are ‘likely to impose greater pain and inconvenience’ by making those in need of care wait longer than necessary for surgery, an official report found. By making patients wait sometimes for as long as four months, it is hoped they will remove themselves from lists ‘either by dying or by paying for their own treatment’.  The claims are outlined in a report by the Co-operation and Competition Panel (CCP), an independent watchdog that advises the NHS.  With NHS bosses having to make £20billion of savings by 2014, the organisation discovered damning evidence that managers are imposing minimum waiting times and ‘excessively constraining’ patients’ rights to choose where to have routine operations, such as hip replacements. – Daily Mail

Shapps in housing U-turn

The government has revised instructions to the social housing regulator to explicitly state that flexible tenancies should normally last a minimum of five years. Under an updated draft direction on tenure social landlords will be required to set out any circumstances in which they will offer tenancies of less than five years in their tenancy policies. The previous version of the draft direction stated that two-year tenancies, which are the shortest that will be permitted under the Localism Bill, should only be used in exceptional circumstances. It did not state what these circumstances would be, or that five-years would otherwise be the minimum. Before the directions to the regulator were published housing minister Grant Shapps had told MPs that five years would be the norm. The omission of this statement from the draft directions when they were first published in July prompted Labour MP Nick Raynsford to accuse him of ‘a disgraceful breach of his own promise’ and call for him to explain his actions to parliament. – Inside Housing

An Autum of discontent?

Leaders of teachers, nurses, civil servants, firefighters and other public sector workers claimed they were being “frogmarched” into co-ordinated strike action after the Treasury took the surprise step of setting out in detail how much individuals will have to pay in contributions to their pension schemes from next April. The overall cost of £1.2bn is broadly as expected, but senior union sources said “we had no warning of this co-ordinated announcement for each scheme, or that it would be leaked to the Telegraph and the Sun laced with the usual rhetoric about ‘gold-plated pensions‘.” Union leaders said they were convinced some ministers, including Cabinet Office minister Francis Maude and health secretary Andrew Lansley, remain committed to a negotiated settlement before the new regime is introduced next April, but they questioned whether Treasury ministers were only interested in cash savings. Unison leader Dave Prentis accused Alexander of “crude and naive tactics”, urging ministers to “stop treating these talks like some kind of playground game”. – the Guardian

Tories outspend Labour

The Conservative Party spent £15 million more than Labour last year, according to official figures. The Tories spent £49,205,000 during 2010, including on the general election campaign, while Labour spent £33,840,000, the Electoral Commission said. As the independent party funding watchdog published the financial accounts of the main political parties, the British National Party (BNP) and Christian Party were warned they could face substantial fines for failing to submit their accounts on time. The figures show that the Conservative Party received income of £43,143,000, suffering an overall loss over 2010, while Labour received £36,270,000. And the Liberal Democrats spent £9,973,077 over the year, with an income of £9,637,354. – Huffington Post

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The dawn of hope?

14/06/2011, 04:09:12 PM

?by Nick Pearce

Ed Miliband used his speech yesterday to bring the contributory principle back into the heart of Labour thinking on welfare reform, which got Frank Field and Labour bloggers very excited.

Although the Labour leader didn’t mention it, it was fitting that he referred to the principle of contribution this year, since 2011 is the centenary of the great 1911 national insurance act, which brought in unemployment and sickness insurance (those were the days when a progressive alliance really did achieve bold reforms).

It is less clear, however, that the contributory principle can really serve to underpin a modernisation of the welfare state for the twenty first century. It only now covers around 10% of working age benefits, and it is being scaled back further under the government’s plans to cut employment support allowance.

Where it still has real purchase is in respect of the basic state pension, for which the earnings link has been restored. But even here fairness and equality for women have demanded an extension of the notion of contribution to cover caring activities, as well as work (while the government plans a single-tier flat rate state pension for which a contributory record would not strictly be necessary).

Moreover, it is not possible simply to withdraw public services or benefits for people who are in need. Children must be housed and educated, whatever their parents have done. Article 3 of the human rights act also places a floor under the welfare state, preventing people from suffering humiliating and degrading treatment through destitution.

Nonetheless, reciprocity is vital to public support for the welfare state and the strength of community solidarity. So Labour is not on the wrong track. But it needs to think about the notion of contribution in broader terms: not just to embrace caring and community activities, but to mean reciprocity across a range of services and entitlements, whether funded by general taxation, National insurance or hybrid state-private insurance policies.  Social housing is an obvious candidate for reform in these terms, as Miliband intimated (although need as well as contribution must figure in social housing policy, and the supply of housing must be expanded regardless). Post-Dilnot, social care could become another. Other services – such as childcare – can be seen as part of the social contract, even if earned entitlement does not mediate access to them; after all, the NHS is hugely popular precisely because it guarantees universal access based on need, not worth or desert.

By talking about responsibility from top-to-bottom of society, Miliband has also refused to allow this debate to be focused on the poorest alone. While right-wing think-tanks and others want social justice to be reduced to what happens to an “underclass”, Labour’s leader is keeping the whole of society in view (on which I have more to say in the forthcoming edition of IPPR’s house journal). Quite right.

Nick Pearce is director of IPPR.

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We learnt from our mistakes. The Tories are set to emulate them.

04/04/2011, 12:11:44 PM

by John Woodcock

The mythical cost free, universally popular, radical ideas box has been mentioned in this column before.

Though it was coined by Thick of It scriptwriters satirising the last Labour government, the box is enjoying a new lease of life under the new Conservative-led regime.

Iain Duncan Smith whipped it out live on Sky yesterday morning when discussing his proposals to merge the basic and state second pensions, due to be set out in the House of Commons today. (As an aside, I am not sure Labour in government was ever able to get away with quite the level of blatant pre-announcing to the media that ministers now routinely carry out before Parliamentary statements). (more…)

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Raising the state pension age hits the hard-working the hardest

11/02/2011, 11:43:46 AM

By John Hannett

Any increase in the state pension age has the biggest impact on those who cannot afford to retire without it.  Predominantly men in low-income jobs and women.

That is why Usdaw member, Barbara Bates, has set up a petition against the Tory-led government’s plans to speed up the increase in the state pension age to 66 by 2020 for both men and women:

Barbara’s story sets out how she feels that ministers have robbed her of two years of freedom, and of over £10,000 of state pension that she has been working for since the age of 15. (more…)

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Devil in detail part 9: inheritance tax cut for the super-rich

14/12/2010, 01:02:06 PM

by Neil Lovatt

Under new government proposals published last week, it will now be possible for the super rich to use their pension assets to avoid inheritance tax. The requirement for pension assets to be paid out within a person’s lifetime is removed in the new arrangements. But pension assets sit outside the IHT regime. Thus by leaving substantial assets in their pensions at death, the very wealthy will henceforth be able to avoid enormous amounts of inheritance tax.

The full set of the government’s proposed pension changes is here, and they are unlikely to be read by anyone other than the odd policy wonk, such as myself, or a specialist journalist with a readership of a few hundred. It’s hardly front page news, but it should be.

The problem with pensions is their inflexibility. The tabloid media waste no time in stoking the flames of hate over pension rules restricting access to your money. (more…)

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