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banner Wednesday, 4 October, 2000, 14:26 GMT 15:26 UK
State pension opt-out backed
David Willetts
David Willetts: Pensioners need dignity and respect
The Conservatives have said that they will allow young people to opt out of the state pension, a policy first put forward at the last general election.

And they have confirmed their promise that all pensioners would get an increase in the basic pension of between 5.50 to 10 a week from next April.

Every pensioner and millions more besides have been outraged by the measly 75p increase on the pension.

We Conservatives share that outrage

David Willetts
Speaking at the Conservative Party Conference in Bournemouth, shadow social security secretary David Willetts attacked the government's "measly" 75p a week increase in the basic rate.

"Every pensioner and millions more besides have been outraged by the measly 75p increase on the pension. We Conservatives share that outrage," he said.

He said that the Tories would consolidate the winter fuel allowance and the free television licence for the over-75s into the basic state pension.

That would give pensioners more dignity and respect.

"No ifs, no buts, no special application forms, no loss of means-tested benefits, no extra tax," he said.

Matching Labour plans

Mr Willetts said that the Conservatives would match any Labour increase in pensions.

"If Gordon Brown uprates pensions by more than inflation, we will accept that and still add our reform package on top.

Pensions have become a major battleground
Pensions have become a major battleground
"So we can look every pensioner in the eye and say: 'You will be better off under the Conservatives,'" he said.

He said that the Tories would make available an additional 320m in new money, as well as finding 3bn in savings from the overall social security budget.

And he attacked the government's plans to provide higher mean-tested benefits as overly complex and insulting to pensioners.

"Our proposal guarantees more money for pensioners.

"But more than that, it offers dignity, respect and trust," Mr Willetts added.

Some pensioners groups and Labour delegates at last week's conference have called for the restoration of the link between pensions and average earnings, abolished by Mrs Thatcher's Conservative government in l980.

Mr Willetts made no mention of this issue.

But Gordon Lishman, Director General of Age Concern England, said:

"Although amalgamating the winter fuel payment and other pensioner payments may make it easier for older people to understand what they're getting in their pockets, it won't represent a real or sufficient pension increase."

And the Liberal Democrat social security spokesman, Steve Webb, said that the Conservatives were only offering most pensioners 42p more a week.

"Pensioners were insulted by Labour's derisory 75p. They will not be fooled by half-truths and worthless promises. The choice is clear - only Liberal Democrats guarantee above inflation increases of 5 for all pensioners," he said.

Opting out of state pensions

Mr Willetts said that the Tories would be offering younger workers under 30 the option of building up a real pension fund, rather than contributing to the state pension scheme.

He said that if the stock market performed as well in the next 30 years as it did in the last 30, people who saved 500 a year would receive double the current state pension of 67 a week.

"We want the next generation to have bigger, better, funded pensions. We can only achieve that if we encourage saving now.

"This is another step on the great Conservative vision of a property-owning democracy," he said.

But he made it clear that those who wanted to remain in the state pension scheme would still be able to do so.

Tackling fraud

Mr Willetts said that the government's plans for increased benefits for working families was overly complex and put too large a burden on employers who will have to administer the new scheme.

"Gordon Brown is trapping families in the most complex benefit system they have ever faced," he said.

The Conservatives would return the payment of such benefits to the chief carer in the family.

And Mr Willetts said that the Tories would put renewed effort into tackling fraud by setting up a National Benefit Fraud Squad to look at fraud across the whole of the benefits system.

He said that currently only 800 cases out of 160,000 suspected housing benefit frauds were prosecuted.

Junior shadow social security spokesman Eric Pickles added that the Conservatives would tackle the dependency culture, and introduce a "can work, must work" guarantee - claimants who were able to work would lose their benefits if they refused a job.

Attack on stakeholder pensions

Shadow social security minister Jacqui Lait said that the government's plan to introduce stakeholder pensions - cheap occupational pensions for those earning between 10,000 and 20,000 a year - was already a failure.

That was because the government's policy of means-tested benefits for the elderly were "taking away any desire to save" for hard-pressed families.

And she said that a Conservative government would abolish the requirement that people in private pension schemes would have to take out an annuity when they retire.

The value of such annuities has been falling sharply in the last few years.

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See also:

24 May 00 | UK Politics
Hague pledges pensions rise
28 Apr 00 | UK Politics
Pension rise confirmed
29 Mar 00 | UK Politics
Elderly 'missing out' on benefits
01 Jun 00 | UK Politics
New Deal 'an expensive flop'
28 May 00 | UK Politics
Elderly focus of policy battle
02 Oct 00 | Conservatives
Going for grey
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