Citizen's Pension
Who's talking about it?
Senator Bob Brown, the leader of the Australian Green Party, has again this week asked the government to increase state pensions by $30 a week, something he asks for on a regular basis (he asked again less than two weeks ago). He notes the government has recently spent $31 billion on inflationary tax cuts, $41 billion on "future funds" for infrastructure and $22 billion on defence, but has given zero to lift the AU$273 per week pension.
Although $30 a week (around £7.50) does not seem much, in an aging population where many pensioners have to choose between heat or food, an extra few pounds are welcome.
The state of pensions at present
According to the UK's Guardian newspaper, only 13% of women presently receive the full state pension, as men need to have paid 40 years of National Insurance contributions and women must have paid for 35 years - many women take career breaks to bring up children or care for older relatives, and part-time work harms a person's pension.
Yet according to the Pensions Policy Institute, "A Citizen's Pension would provide a swift, simple and sustainable remedy for the problems in our state pension system".
What is a Citizen's Pension?
This is not a new idea. It has been around for almost 70 years in New Zealand where poverty amongst seniors is 5% (compared to the UK's 20%).
Simple, fair and cheap to run, a Citizen's Pension departs from the outdated laws set for original pensions, which assumed that women did not go out to work. Yet present pensions are also unfair for women who choose to stay at home to raise children, and care later in life for older relatives and disabled children, as it is based on National Insurance contributions (which The Green Party would scrap).
How much would pensioners receive?
A Citizen's Pension would give a flat rate income to every person who reached pension age (age 60 under Green policy), at a rate of around 25% of national income (it's well above 30% in New Zealand). Presently, this would work out in the UK at around £100 - this would lift most pensioners out of poverty, and there would be housing benefit on top of this, plus free eye and dental care.
What if I want to carry on working?
Pensioners would also be free to carry on working if they wish (and not have the Citizen's Pension removed), although they would be taxed on earnings above a certain amount.
The bureaucratic systems of Pension Credits and SERPS would be removed (along with National Insurance), placing qualification instead on residency (usually 20 years). Anyone not qualifying on residency would then go through a means-tested process to receive enough money to live on.
What about the UK government lump sum incentives?
The UK government's proposal to offer a lump sum of £30,000 to people who continue to work until age 70, was examined by Green Audit and Dr Molly Scott (Green Party economic advisor) who worked out that if every UK pensioner took this up (bearing in mind that some people may die before age 70, so would not see any benefits), the raised taxation compared to the lump sum payouts would leave the government coffers with an extra £0.7 billion - for asking seniors to work five years more!
How would The Green Party pay for a Citizen's Income?
By scrapping tax relief on private pension schemes, to bring in £15 billion (split between UK pensioners, this would work out at around an extra £23 per person each week, with immediate effect). It is important to note that The Green Party would give each person the full Citizen's Pension whether single or married (i.e. if a single person received £100, a married couple would receive £200). This is not comparable with other parties, most would reduce the rate for married couples to £160 or similar.
What else would The Green Party do?
Greens would form Local Community Pension Schemes (run by councils) to offer fixed bonds (invested in public transport etc) and equity shares (in local businesses). Subscribers would receive annual statements , plus the rate to expect when they retire (this would be in addition to a Citizen's Pension).
People would be free to join private pension schemes (although there would no longer be tax relief), but the income you receive at retirement would not be taxed.
Finally, The Green Party would set up a Pensioners Rights Unit to ensure that every pensioner in the community was receiving the full benefits they are entitled to (it is estimated that presently, over 50% of pensioners are not receiving all their benefits, mainly due to bureaucratic confusion).
