PM told to scrap £90 billion-a-year State Pension as wealthy OAPs benefit most from ‘unfair’ welfare
Someone from Chelsea can live to 88 compared to to a life expectancy of just 71 in poorer Tottenham
THERESA May was last night urged to scrap the £90billion-a-year state pension – as it’s “unfair” on millions of poorer Brits.
A think tank claimed that as well as the huge cost, it’s the wealthy who benefit the most from the current system as they live longer, the Prime Minister was told.
Centre for Policy Studies expert Michael Johnson said: “Chelsea Man can be expected to live until 88 whereas someone in the ward of Tottenham Green may die at 71.
“So Chelsea Man gets 23 years’ worth of state pension and Tottenham Green gets five – but they both pay in the same amount of National Insurance during their working lives.
“The value for money for the least able to afford it is terrible.”
Money already in the pot would continue to be paid out, but on a "means tested" basis reflecting an individual pensioner’s assets.
Under its plans, National Insurance would be merged with Income Tax.
And rather than a State Pension, an individual would pay into a Workplace ISA which then pays out a "pension" between the ages of 65 to 80 – when a new state-funded Senior Citizen Pension of £200 a week would kick-in.
All non-pensioners in 2020 would be eligible for it, thus the first payments would be made under the scheme in 2034.
The report says the Senior Citizen Pension should be complemented by a Workplace ISA, to accommodate employer contributions made under automatic enrolment.
This would be significantly pre-funded by the state via a 50% bonus, up to a modest annual cap, with no access to assets permitted until people hit 65.
Mr Johnson said: “I believe the Government could save between £5billion to £10billion a year.”
The call comes a month after former CBI boss John Cridland suggested allowing manual workers access to their pension early because of lower life expectancy rates.
Former Pensions Minister Ros Altmann said the CPS proposals would be “socially damaging” and could actually increase inequality between the rich and the poor.
She said: “Replacing state pensions with a ‘Workplace ISA’ would consign far more people to poverty than the current system.”
The peer added: "Delaying state pensions to age 80 would advantage the higher-income, longer-living professional classes, and disadvantage those who are in poor health, have the lowest life expectancy, were lower earners and live in more depressed areas of the country.
"This would compound current social injustices and lead to wider inequality - the opposite of the Government's stated social aims.
"Only those who are better off could contemplate with equanimity the idea of people saving privately to cover all their needs before age 80."
A Department for Work and Pensions (DWP) spokesman said: "As well as being clearer and fairer, the new state pension introduced in April this year will also make the system more sustainable and secure its long-term future.
"In 2014, the Government legislated for a six-yearly review of state pension age, ensuring it will continue to reflect changing life expectancy."
The plan comes as a former government "tsar" for older people has hit out at "botched plans" to increase the state pension age for women.
Labour peer and broadcaster Baroness Bakewell accused the Government of failing to "acknowledge the scale of the injustice and the growing scale of the protest" at the move, which she argued had caused hardship.
Her criticism came after pensions minister Lord Freud told her there was no plan to revisit the policy and pointed out more than £1billion had been made available to reduce its impact.
Under the 1995 Pensions Act, the Government decided the pension ages of both men and women would be equalised by 2020. Previously, women retired at 60, while men retired at 65.
But in 2011, state pension ages were raised at an even faster rate, with some women born between April 1951 and 1960 not qualifying for a pension until the age of 66.
Lady Bakewell said: "2.5 million women have been affected by the botched plans to align the pension ages and it is bringing increasing hardship to women who are now retired and have no income and no pension.
"These are women who have paid into their pension plan for decades, often since they were in their teens."