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It was the case of the dog that didn’t bark in the night. That, certainly, was my feeling after hearing the Chancellor deliver his eighth budget speech. I firmly believed, right up until the last moment, that the Chancellor would have something serious to say about the near collapse of voluntary pension savings. Instead he made a welcome announcement of an additional £100 winter fuel bonus for pensioners over 70. But even here he was careful to limit the increase to this year only.

The two gaping holes in the budget were that there was no mention of the 60,000 individuals who have seen their occupational pension reduced, or simply wiped out, when their firms wound-up their pension scheme. Likewise, the Chancellor remained totally mute on how best to encourage workers to begin saving seriously for their retirement.

The campaign for justice for those pension scheme members who had lost their occupational pensions had been led from the very start by Pensions Week. The Pension Bill currently winding its way through parliament will establish an insurance fund, which will hopefully prevent such a position occurring again. But the Government is wrong to think that it can ignore the claims of the 60,000 or so pensioners who will be left marooned once the new insurance coverage comes in.

There will be all party support for an amendment when the bill is again debated by the whole House. Already 200 MPs have signed an Early Day Motion I have tabled, which calls for a levy on unclaimed bank and building society accounts to finance a rescue operation.

Hopefully the Government will table its own amendment when all MPs come back to discuss the bill. If it does not some MPs believe that, because so many of them feel so strongly about this issue, the Government will risk defeat. The Tories and Liberals will all vote with Labour backbenchers for a rescue package.

I believe a more likely scenario is that such an amendment will be put into the bill in the Lords. The Government will then be faced with the hugely embarrassing choice of whether they agree a new scheme for those who have already lost their pensions, but which has been foisted on to them, or whether they have the nerve to sink such a life boat operation. How much better it would be for the Government to keep in the lead here and bring forward its own proposals along the lines of the 2002 bill I introduced on winding-up pension schemes.

Perhaps it was too much to expect the Chancellor also to announce long-term pension reform of the kind which would encourage a step change in the amount people save for their retirement. Last week saw two more proposals for an adequate basic pension. There now exists a total consensus on these long-term reforms from which only the Government stands apart. The only debate in town is on how such an improved basic pension can be financed. Most proponents are going for a pay-as-you-go system. I, along with the Pensions Reform Group, favour combining a pay-as-you-go with a funded scheme.

At some stage a government will come down in favour of one of these two approaches. As such a scheme must be compulsory it will have to entail some redistribution, and for the redistribution to be accepted, the benefit for those who pay extra must be over and above what they gain from investing their own money.

That is why I favour a partly funded approach, which will offer a guarantee of a minimum pension around 25 per cent of average earnings. The vast majority of us could never buy such a policy if we were shopping in the private market. But knowing we had that guarantee would mean that every penny of savings would be kept and not clawed back in loss of means-tested benefit as it is now. It is this insidious spread of means-testing to 75 per cent of pensioners which has undermined the extensive voluntary savings for retirement that existed prior to 1997.


			THE SILENT WATCHDOG

		It was the case of the dog that didn’t bark in the night. That, certainly, was my feeling after hearing the Chancellor deliver his eighth budget speech. I firmly believed, right up until the last moment, that the Chancellor would have something serious to say about the near collapse of voluntary pension savings. Instead he made a welcome announcement of an additional £100 winter fuel bonus for pensioners over 70. But even here he was careful to limit the increase to this year only. The two gaping holes in the budget were that there was no mention of the 60,000 individuals who have seen their occupational pension reduced, or simply wiped out, when their firms wound-up their pension scheme. Likewise, the Chancellor remained totally mute on how best to encourage workers to begin saving seriously for their retirement. The campaign for justice for those pension scheme members who had lost their occupational pensions had been led from the very start by Pensions Week. The Pension Bill currently winding its way through parliament will establish an insurance fund, which will hopefully prevent such a position occurring again. But the Government is wrong to think that it can ignore the claims of the 60,000 or so pensioners who will be left marooned once the new insurance coverage comes in. There will be all party support for an amendment when the bill is again debated by the whole House. Already 200 MPs have signed an Early Day Motion I have tabled, which calls for a levy on unclaimed bank and building society accounts to finance a rescue operation. Hopefully the Government will table its own amendment when all MPs come back to discuss the bill. If it does not some MPs believe that, because so many of them feel so strongly about this issue, the Government will risk defeat. The Tories and Liberals will all vote with Labour backbenchers for a rescue package. I believe a more likely scenario is that such an amendment will be put into the bill in the Lords. The Government will then be faced with the hugely embarrassing choice of whether they agree a new scheme for those who have already lost their pensions, but which has been foisted on to them, or whether they have the nerve to sink such a life boat operation. How much better it would be for the Government to keep in the lead here and bring forward its own proposals along the lines of the 2002 bill I introduced on winding-up pension schemes. Perhaps it was too much to expect the Chancellor also to announce long-term pension reform of the kind which would encourage a step change in the amount people save for their retirement. Last week saw two more proposals for an adequate basic pension. There now exists a total consensus on these long-term reforms from which only the Government stands apart. The only debate in town is on how such an improved basic pension can be financed. Most proponents are going for a pay-as-you-go system. I, along with the Pensions Reform Group, favour combining a pay-as-you-go with a funded scheme. At some stage a government will come down in favour of one of these two approaches. As such a scheme must be compulsory it will have to entail some redistribution, and for the redistribution to be accepted, the benefit for those who pay extra must be over and above what they gain from investing their own money. That is why I favour a partly funded approach, which will offer a guarantee of a minimum pension around 25 per cent of average earnings. The vast majority of us could never buy such a policy if we were shopping in the private market. But knowing we had that guarantee would mean that every penny of savings would be kept and not clawed back in loss of means-tested benefit as it is now. It is this insidious spread of means-testing to 75 per cent of pensioners which has undermined the extensive voluntary savings for retirement that existed prior to 1997.

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