IDS plans a citizen's pension of £140 for all

By Tim Montgomerie

Is it too good to be true? The Daily Mail, Sun and Guardian all report draft plans from the Department of Work and Pensions that, later in this parliament, would see a single pensioner receive a pension of £140 and £280 for a retired married couple. Means-tested pensioner benefits will be swept away to fund this new "citizen's pension" and the reform will, it is said, be funded by the later retirement age and abolishing the complex bureaucracy that administers the humiliating process of form-filling that stands between pensioners and top-up benefits.

The reform, notes the Mail, would be a big boost for women and stay-at-home mums in particular:

"A mother who gives up her career to stay at home and look after her children would get the full pension regardless. The coalition has been criticised for removing child benefit from single-earner couples whose income is over the higher rate tax threshold, hitting better-off women who give up their careers to look after their children. But this reform would be a significant boost to single-earner couples, as it alters the calculations they have to make about how they would fund their retirement."

Ros Altmann, head of SAGA and a former pensions consultant at the Treasury, gave a warm welcome to the proposal:

"A full-rate citizens' pension would be the most fantastic reform. The current system was designed decades ago by men and for men. It isn't fair to women."

The idea is a long-standing belief of Liberal Democrat Pensions Minister, Steve Webb.

The Coalition is taking on all sorts of interest groups as part of its radical zeal but it has made the strategic decision that it will do nothing to upset pensioners, the most active voting bloc. In The Independent Mary Ann Sieghart regrets the Chancellor's caution on benefits such as the Winter Fuel Allowance:

"So we're all in this together, are we? Well maybe, but only if we're still young enough to work. Thanks to one intemperate outburst by David Cameron during a TV election debate, Britain's pensioners can now look happily on while the rest of us see our incomes shrivel. How fair is that, exactly? ...Back in 1979, 43% of pensioners were in the bottom fifth of the income distribution; now it's just 14%. But our attitudes haven't caught up with this shift. We still think of pensioners as needy. In fact, their incomes have grown much faster than ours. In the past 10 years, they have risen by 38% in real terms, compared with a 12%increase in average earnings. And that's on top of a 68% growth between 1979 and 1997 – which was nearly twice as fast as earnings."

The transfer of wealth from younger to older generations was the subject of David Willetts' recent book, The Pinch.