Fight for the grey vote

By BBC News Online's Steve Schifferes

All the main parties are targeting older people with promises of more money in their pocket in return for their vote.

The potential rewards are high for those candidates and parties who show they are genuine in wishing to meet the aspirations of older people.

Gordon Lishman, Age Concern England

The Tories have now launched their own manifesto for pensioners, claiming that a pensioner couple would be more than £8 a week better off under their proposals.

Labour says it has spent an extra £4.5bn a year on pensioners, while the Liberal Democrats want to spend another £4bn a year for the state pension for older people.

All the political parties hope that by helping the "grey vote", they will win the support of the UK's most reliable voters and secure public support.

High rewards

The UK's eleven million pensioners are far more likely to vote than their younger counterparts, and will make up perhaps one-third of all voters.

Gordon Lishman, director of Age Concern England, says that "the potential rewards are high for those candidates and parties who show they are genuine in wishing to meet the aspirations of older people".

I don't think we can carry on - indefinitely - promising ourselves earlier and earlier retirement

Peter Thompson, Assn of Pension Funds

In addition, pensioners are usually seen as 'deserving' of help by the public - although in reality there is a growing disparity between poor pensioners and the relatively better-off who are able to rely on occupational pensions.

Worries about private pensions

In fact, all the parties are relying on the private pension system to take care of the needs of most retired people, leaving the state to help the needy.

But, as the number of pensioners increases in relation to the working population, and they live longer, it is not clear whether even the present state arrangements are sustainable.

Peter Thompson, the head of the National Association of Pension Funds, which speaks for the occupational pensions industry, has warned that people will have to work longer if they want to retire on generous pensions.

"I don't think we can carry on - indefinitely - promising ourselves earlier and earlier retirement," he said.

"Pension promises are becoming increasingly unaffordable as life expectancy gets longer."

But despite all the rhetoric about the grey vote, the reality of falling future incomes is not something that the main parties want to confront, especially during an election.

Labour's U-turn

Pensioners have become more vociferous in recent years and this is reflected in the party's election literature.

In Labour's election manifesto this time, the word pensioner is mentioned 76 times, compared to only 30 times in the l997 manifesto.

Labour promised that pensioners would 'share fairly in the increasing prosperity of the nation'. But since then there has only been a fall in the slice of national wealth spent on pensioner benefits.

Charles Kennedy

This in part reflects the fact that Labour was ambushed at its party conference last year by pensioners protesting against the 75p increase in the state pension in April 2000.

As with the fuel protesters, Labour's resolve to stick to tough economic targets crumbled.

Chancellor Gordon Brown was forced to introduce a £2.9bn package, increasing the basic state pension by £5 per week from this April for a single person and £8 per week for a couple, with further increases next year, and an increased winter fuel allowance.

Labour pension plans

State pension up £5 per week, £8 for couple

Minimum income guarantee of £100 per week by 2003

Pensioner credit to boost savings

Private stakeholder pensions for moderate earners

And although Labour resisted pressure to restore the link between state pensions and earnings, it was forced to concede that the means-tested minimum income guarantee would rise by earnings not prices, to £100 per week.

Still falling

But despite these plans, the value of the basic state pension is set to fall to just 7% of average earnings.

The parties have come up with different plans to supplement pensioner incomes.

Labour has vowed to work with the private sector, making cheaper private stakeholder pensions available to people on moderate incomes who do not have an occupational pension.

But it is not clear whether such a voluntary scheme will provide enough incentive for people to save more for retirement - especially as those who don't will benefit from Labour's more generous means-tested schemes.

Tories' radical plan

The Tories have called for a far more radical reform of the pension sector, while promising still more money for existing pensioners.

There would be a £6bn black hole in the National Insurance Fund

Gordon Brown

The party has called for a partial privatisation of the state pension, allowing young people to opt out of National Insurance, investing some or all of the money instead in their own personal pension - which, they say, would allow them to get a higher return on the money.

Although such schemes might offer great long-term benefits, the problem is the transition.

At the moment the current generation in work pays the pensions of the previous generation who has retired through their NI contributions.

Tory pension plans

Extra £1 per week for over 75s

Tax allowances up £2,000 for pensioners

Exempt all savings from tax at basic rate

Allowances can be consolidated into pension payment

More flexibility on annuities

To introduce a new system they would have to effectively pay twice, putting aside money for their own retirement but also continuing to support the older generation for now.

Labour was quick to seize on this, claiming that the scheme would cost £6bn per year and create a "black hole" in the public accounts - a charge the Tories denied even as they said there were no plans to immediately implement such a scheme.

And the Tories have plenty of other benefits for pensioners in their manifesto - including another £1 a week on the basic state pension for older pensioners (£2 for couples), with more for older pensioners, and an increase in the personal allowance by £2,000, taking one million more people out of tax - at a cost of about £1bn.

That mainly targets better-off pensioners - as do proposals to exempt all basic rate taxpayers from paying tax on their savings, costing £3bn.

Liberal largesse

The Liberal Democrats have suggested that only they will guarantee the future of the state pension.

LibDem pension plans

State pension up £5 per week, £10 per week for over 75s, £15 for over 80s

Free long-term care

Introduce owned second pension

Extend eligibility to state pension to all

They plan to raise the basic state pension by an additional £5 per week, with £10 more for over-75s and £15 more for over-80s, at a cost of nearly £3bn a year - compared to just £200m more for child poverty and £150m more for policing. (For couples the increases are £8, £18, and £28 respectively.)

But they also want the government to pay the full costs of long-term care for elderly people who need to go into residential homes - a move that has proved highly popular in Scotland.

That is costed at about £800m per year - but could prove to be much more expensive if the many people who are looking after their elderly relatives decide to take advantage of the new provisions to move them into residential care.

At present, about two-thirds of the frail elderly are looked after at home.

That could require much greater tax increases - for example, in Germany, national insurance rates were increased by 3% to pay for such a change.

None of the main parties wants to face up to the painful choices that lie ahead - that as we live longer, and suffer more ill-health, we may have to work more and receive less - and end up paying substantially higher taxes.