Link to this page: https://www.socialistparty.org.uk/issue/804/18366
Pensions: Osborne's 'counter-revolution'
The right-wing media has been falling over itself to heap praise on George Osborne's "pension revolution". This follows the Chancellor's relaxation of rules regarding private pensions.
From April 2015, people over 55 with a defined contributions pension scheme will be able to take all their pension savings in one lump sum instead of having to purchase annuities, which pay a regular income.
Rachel Reeves, Labour's shadow work and pensions secretary, supports Osborne's changes.
Lib Dem pensions minister Steve Webb enthused that elderly people could now blow their pension pots on a Lamborghini sports car (cheapest model £114,000!) if they wished to.
Like their Tory counterparts it only goes to show how out of touch the Lib Dem MPs are. As the National Pensioners Convention points out, nearly one-third of workers retire with less than £1,500 in savings.
Moreover, the majority of people in the government's new occupational self-enrolment pension scheme will be lucky to get £36,000 after a lifetime of contributions.
As Dot Gibson, NPC general secretary, says: "Forget buying a Lamborghini - at this rate pensioners will be lucky to afford a Reliant Robin".
Barely mentioned in the media's budget reports was the incorporation of elderly people's fuel allowance, cold weather payments and Christmas bonus into the government's welfare cap, which leaves them vulnerable to future cuts.
Another detail of the 'pension revolution' is that if people take their pension pot in one lump sum, everything over £25,000 will be taxable as income.
And of course there will be no shortage of con-artists waiting to pounce on unsuspecting people with 'investment opportunity' scams.
All the talk of 'liberating pensions' conveniently overlooks the stark reality that many occupational final salary pension schemes have been closed to new entrants, revised to cost more in contributions but pay out less, or have been scrapped by employers altogether.
Public sector workers' final salary pension schemes are going the same way, and the state pension retirement age has been increased and is likely to be further increased.
Aside from a minority of very wealthy pensioners who might benefit, Osborne's 'pensions revolution' has all the markings of a 'counter-revolution'.
In The Socialist 26 March 2014:
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