IF THE Conservatives retain a presence in Downing Street after May’s general election it will almost certainly be down to their courting of the silver vote.
The Tories have a firm grasp on one political reality that the SNP failed to appreciate last year – that the silver vote is all-important. Three-quarters of over-65s voted in 2010, compared with just 52 per cent of under-25s. Sadly this means that policies tend to be geared towards older voters, contributing to the political alienation felt by younger generations.
Their interests will be particularly low on the Conservatives’ agenda, which has pensions at or near the top. The pension “freedoms” taking effect in April are a key plank of the Tories’ election strategy. They know too well that in the long term the reforms could prove an unmitigated disaster, but in the short term the changes are securing headlines exactly where they want them.
So it’s fortunate for the Tories that the new “universal” pension isn’t being introduced until April 2016. While this year’s reforms target those in or near retirement who have a few quid to invest, next year’s primarily affect those who do not.
People retiring from April 2016 will receive a flat rate pension worth around £152 in today’s money. It will still be based largely on national insurance contributions, but with the second state pension and pension credits being scrapped the idea is to make the system more simple and transparent.
When the proposals were set out two years ago they were well received. But now it seems that more people will miss out than previously thought.
Just 45 per cent of people retiring between 2016 and 2020 will get the full state pension, according to Hargreaves Lansdown, with a million pensioners likely to get less than 86 per cent of it. In all, the firm estimates that some two million people retiring over those five years will get less than the full amount.
It’s not the first time that doubts have been raised over the number of people who will qualify for it. Prudential warned last autumn that more than one in five women retiring after 2016 wouldn’t get the full amount due to incomplete NI records. Many who opted out of additional state pension arrangements will also get less than the government led them to expect.
The government argues that references to people “missing out” are misleading, pointing out that anyone retiring under the new system will be paid at least what their national insurance contributions would buy them under the current system.
But it’s missing the point, which is that people will feel they have been duped. That includes some who will be using the full state pension in their calculations when working out how much to take from their pension pots when the new access rules come into force.
The 2015 election will, of course, be long past by the time all of this comes home to roost. In the meantime, the Tories will do their utmost to ensure that any pension headlines will focus on this year’s shake-up.
The Work and Pensions Committee warned nearly two years ago that the key to the success of the flat rate pension lay in communicating the changes quickly and effectively. But I’d say that the chances of a big publicity campaign any time before the election are pretty slim.
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