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Last Updated: Tuesday, 22 November 2005, 08:21 GMT
Lib Dems unveil pension blueprint
A pensioner
The Pensions Commission report is due next week
The state pension age should rise to 67 to help boost its value from 82 to 109 per week, the Lib Dems say.

The "citizen's pension" would be paid to those who had lived in the UK for at least 20 years, rather than being based on national insurance contributions.

Lib Dem leader Charles Kennedy said the plan would particularly help women, who lose out under the current system.

A government-commissioned report on the future of pensions is expected next week to suggest a pension age of 67.

The Pensions Commission was asked by the government to look into the pensions system, which many experts believe has reached crisis point.

'Raw deal'

Before this year's general election, the Lib Dems promised a "citizen's pension" to all people over 75.

In their latest plans, they are extending the pension to all over-65s.

They say some women receive a poor deal from the present system, which is based on national insurance contributions, because they are more likely to have taken breaks from working.

New citizen's pension of 109 per week for all over-65s, based on residency not national insurance contributions
Raise state pension age to 67 - but only in 25 years time
Scrap second pension and savings credit
Employees have to opt out rather than opt into company pension schemes
Start new pension scheme for those on low incomes

The Lib Dems instead want people to qualify for the pension if they have lived in the UK for at least 20 years, irrespective of whether or not they worked.

And they would set the new pension at 109.45 per week - up from the existing basic state pension of 82.05.

The payments would rise each year in line with increases in average earnings, not prices.


The party says it would pay for the plans by scrapping the state second pension and savings credit.

It would also raise the state pension age to 67, although this would only happen in 25 years time.

Mr Kennedy said: "We have one of the lowest state pensions in the developed world, and one of the most complex systems. Women, in particular, suffer real discrimination.

"I believe that there is now a broad consensus that we need a state pension that is universal - a Citizen's Pension."

Change for MPs

The Lib Dems say they want a review to examine how to change public sector pensions so they are more affordable in the long term.

Members of Parliament should lead by example, they say.

This problem of pensions has crept up over the years and ignored
R. Jopson, Accrington

MPs currently at present receive one 40th of their final salaries for every year of service.

Bringing them into line with other public sector works would mean them receiving one 60th of their salaries.

The Lib Dems do not want to force people to join company pension schemes.

But people would have to opt out of their firm's scheme rather than the current system of having to opt in.

For those on lower incomes, there would be a new pensions scheme run by National Savings.


Pensions Secretary John Hutton is due on Thursday to set out how he will judge the recommendations from the Pensions Commission, which is expected to call for a higher state pension and a rise in the pension age to 67.

The Conservatives say they want to wait to see the report before producing firm plans.

But the party has branded previous versions of the Lib Dem citizen's pensions idea "unworkable".

Instead of moving to a system based on residency, the Tories suggest a system of credits for people who are not working because they care for children or sick relatives.

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