OPINION

CREDIT CRUNCH

by Ken Lacey

Oh, what a mess our economy is in, Banks going bust, the Footsie Index going down and those expecting a good pension on retirement having saved hard cash see it going down the drain. The Banks and Investment Companies who paid their Executives obscene amounts of money in bonuses are crying their eyes out and for what? Sheer greed - and we are all paying the cost.

Add to that inflation in food, petrol, heating and lighting and a pension which cannot cope with such increases then we have a problem.

Not so, of course, the Public Authority Pension because we guarantee that no matter what it costs. Five years ago their pension was £44million in deficit.
Last year it had increased to £160million in deficit.

Heaven knows how much in debt it is now with the Stock Market crash. Over the years we have increased our share of contributions to their Pension Fund from 10.4% of their salary to 19.1% in 2008/09 in the vain hope that the deficit would reduce - no chance!

In 2007/08, as employers, we paid through our council tax £10.9million towards the pension fund - that is £143 on a Band D council tax. We certainly seem to have a two tier society - those who are in the boat and the rest of us trying to keep it afloat.

How long will it be before Central Government realises that this pension is unsustainable, or will they not want to upset the Union?


The case for an Increased Pension

by Ken Lacey of Weston Super Mare Senior Citizens Forum

Our pension is provided by the National Insurance Fund (NIF) which is the accumulated funds of the National Insurance Scheme set up by the Beveridge Report after the Second World War.

The income of the NIF consists of compulsory contributions from employees, employers and the self-employed, plus interest on its investments. Since the·1990s the Fund was made up of 11 % of employees' wages and 12.8% from employers contributions and it has been growing with contributions actually outweighing ,payments. The Government Actuary estimates that the NIF surplus in 2007/08 was £46billion that will rise over the next five years to £115billion.

The portion of contributions that goes. towards meeting the cost of the NHS is top sliced and is never paid into the NIF Fund. This is because once money is paid into the NIF it may only be used for the payment of Pensions and Benefits or for the cost of administering those pensions.
The Fund exists in a real sense and is held separate from consolidated revenue. Contributions are not taxes because they are not directly available for general expenditure by Government.

It has been alleged that three Ministers have admitted that money has been diverted from the Fund instead of using it to increase State Pensions. It is stated that the Fund's surplus is being used to finance expenditure which is totally unrelated to the purposes for which the Fund was set up. It is also alleged that the surplus used to be invested in Government Gilts but since 2006 it has been invested in a Call Notice Deposit Account with the Commissioners for the reduction of national debt. If the Government has been using the surplus in the NIF to fund other public expenditure from the Pension Fund, it would appear to be a very questionable procedure.

It may be seen as a justifiable virement by Government Ministers but pensioners on low incomes may consider it a misappropriation of funds.

Joe Harris, the NPC Secretary, says it would cost £600million to restore the link between earnings and pensions now and £9billion to pay everyone a pension of £114 per week. The money is clearly there and there is no reason why pensioners should subsidise Government expenditure at the expense of having a decent pension.

If these allegations are correct, then we will await the outcome of the NPC revelations with considerable interest.



Pensions - the Reality
by Ken Lacey of Weston Super Mare Senior Citizens Forum

It is not surprising that when an MP gets to Westminster he, or she, loses touch with reality. 

With a salary for a back bencher of ?60,000 plus ?120,000 expenses I would imagine life does take on a different dimension, particularly if they haven?t been too successful in private life. 

Add to that a pension pot of ?140,000 after five years? service ? if you are there for twenty years your pension pot swells to ?670,000.  The Prime Minister, of course, receives an ?85,000 pension the day he leaves office.

I don?t have a problem with that.  However, I do have a problem with the fact that they consider that we, the pensioners, are THE PROBLEM because we are living too long and, therefore, it is extremely difficult to give us an adequate pension to cover the essential ever increasing necessities of life.  This is the most outrageous statement I have ever heard, they are actually blaming us for their own inadequacies and incompetence.

The next generation of pensioners are going to be even angrier than we are, unless, of course, you?re in the Public Sector where we, the taxpayer, guarantee your final salary pension ? and that includes our MPs.

So - What should be done?

Abolish Pension Credits   Pension Credits create more costly administration.

Increase State Pension to ?105 per week linked with national earnings.

Abolish means testing   Administration too costly and too complicated for many to understand, hence there is a low take up.

Abolish Council Tax  ~  in its present form it is unfair taxation and should be replaced with ability to pay based on income.

What the Political Parties are offering?

Labour  ~  Nothing but a vague promise of a citizens pension.

Conservative  ~  Restore earnings link and increase pension by ?7 a week.

Liberal Democrats  ~  ?25 per week for over 75s and a Local Income Tax to replace council tax.

The Turner Report, which has been studying pensions for the past two years, has come out with the reasons for the pensions crisis but his solution to the problem won?t be published until AFTER the Election.

The ?reality? is that our pensions are totally inadequate to meet today?s massive increases in council tax and cost of living increases.

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