Budget 2013: did the Chancellor deliver for older people?

Following statements from the Chancellor prior to the budget, it seemed that older people were due to benefit from significant changes to the future funding structures of social care and pensions. However, following the Chancellor’s statement there is little new to celebrate.

The main point of interest for pensioners was confirmation that the implementation of the cap on social care costs (the ‘Dilnot’ reforms) and the introduction of the single-tier state pension will both be brought forward to 2016-17. From April 2016, there will be a cap of £72,000 on the costs of care, and the upper threshold limit for the residential care means test will be increased to £118,000.

440x210_pound-coinsWhilst we welcome the earlier implementation of the care costs cap and the higher upper means test threshold from April 2016, this will do nothing to help the 800,000 older people who need help with everyday tasks but receive no formal state support. Since 2010/11, in real terms £700 million has been cut from local authority spending on social care. Although the Government has provided additional investment for social care over the course of this parliament, it has not been enough to halt the downwards spiral in care funding. As a result, 85 per cent of local authorities now provide care only to people with substantial or critical needs.
Continue reading “Budget 2013: did the Chancellor deliver for older people?”

How are the current policies of UK government and businesses meeting the needs of an ageing society?

1.4 million people in the UK are now aged over 85 and the numbers of older people continue to rise. Age UK’s new report, Agenda for Later Life 2012, looks at how public policy is meeting the challenges of an ageing society both at home and abroad.

This annual stock take sets out our longer term vision and the priorities for action in each area. We outline the opportunities to build on the positive developments of 2011, such as the publication of the Dilnot report on care funding, proposals for reform of State Pensions and the abolition of the Default Retirement Age.

While the Coalition Government is starting to address some of the challenges associated with ageing, action is needed to bring together disparate policy threads and to create an overarching, strategic framework for active ageing for today and tomorrow.

This should cover what Government, local authorities, the private and voluntary sector and individuals need to do. After all, our ageing society affects us all. Continue reading “How are the current policies of UK government and businesses meeting the needs of an ageing society?”

Simplifying small pension pots

This blog first appeared in Money Marketing

The growing  number of people with multiple small pension pots has been an issue for too long.

The government itself  has calculated there will be an additional 4.7 million more small pension pots in the years to come as a result of the introduction of auto-enrolment, government moves to extend working lives and  increasing  job mobility.

So, Pensions Minister  Steve Webb’s  announcement that he has launched a consultation to simplify the system and make it easier to amalgamate  small pots is excellent news. For millions of people with modest pensions accumulated over their lifetimes, the right changes to this currently restrictive and overly complex system could mean a simpler and more cost-effective introduction to retirement.

Age UK has been lobbying for some time for the Government to recognise the difficulties facing these pension savers.

In particular, we’ve been calling for  the ban on transfers  into  the National Employment Savings Trust (NEST)  to be lifted  so that  people leaving an employer can be encouraged to transfer their pension savings  and can hold them in one single lifetime account  with  low charges.  This needs to be introduced as early as possible and well before 2017 when a review of the ban on transfers is currently expected. As part of the general shift from defined benefit to defined contribution pensions, there will be many people coming up to retirement with small pots in the next few years, and public attitudes towards pensions will be damaged if they find it difficult and complex to access their savings.

The government took the first step  in overhauling  its pensions legislation in the  Autumn Statement  when it  announced that, from April 2012, savings under £2,000 in a maximum of two personal pensions can be paid out in cash. This reform has been on the cards for some time so we’re pleased that it is finally being implemented.

Let’s hope that Steve Webb’s announcement  heralds  the next big  step in  transforming the system so that it works in favour of all pension savers, not just those who have been able to accumulate large savings.

Workplace pensions: more bang for our buck needed

The  private pensions market has been sent a welcome wake-up call by the report of the Workplace Retirement Income Commission, chaired by Lord McFall.

The report says that although auto-enrolment into pensions  will be an important step forward when it starts to be phased in from 2012, more needs to be done, and it needs to start now.

Lord McFall doesn’t pull his punches in his introduction , in which he says that it has been a shock to discover that, even after auto-enrolment, up to 9 million people may still fall through the cracks in the system and could be on course for a poor old age.

Age UK gave evidence to the Commission, so we’re pleased that the report picked up many of our concerns in its recommendations. These include:

  1. Improvements to the state pension so that it provides a firm foundation for private saving.
  2. Action to reduce charges in some ‘defined contribution’ pensions where the savers ‘pension pot’ can be eroded by high management fees.
  3. Getting better value from your pension pot when it comes to turning it into a pension income on retirement, usually by buying an annuity. Up to two-thirds of people buy from their pension provider, although you can boost your income by up to a fifth, or even more, by switching to a new company.
  4. Making life easier for people with small pension pots, by allowing them to be transferred to the new National Employment Savings Trust (NEST) which has low charges and is being set up to help people on low and modest incomes.
  5. Taking the politics out of pensions, by setting up an independent standing commission on pensions to provide independent advice and rigorous analysis to the Government of the day.

What happens now? The Commission has no official status; it was set up by the National Association of Pension Funds and the Government has not formally responded. But certainly we at Age UK will be working hard to ensure that these recommendations don’t get lost in the swamp of day to day politics.