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Labour aims to slow down the pace of change on pension age

Reeves

Labour will try to block the Government’s plans to accelerate the rise in the state pension age, according to Shadow pensions minister Rachel Reeves.

In an interview with Money Marketing, Reeves, who is MP for Leeds West, says Labour will lay down amendments to the Pensions Bill going through the House of Lords to try to prevent the changes.

The bill will see men and women’s state pension age equalised at 65 in 2018 and rise to 66 by April 2020. The coalition agreement says the pension age will not start to rise to 66 before 2016 for men and 2020 for women.

Reeves says the Government’s plans affect too many people and do not give them enough time to adjust.

She says: “The big problem for me and for Labour is the acceleration in the timetable for increasing the state pension age.

The plan is unfair and badly timed and goes against the coalition agreement.

“The bill is our priority for the next few months so we are going to be putting down amendments and potentially voting against big parts of it.”

Reeves says she realises there is a need to address increasing longevity and the financial situation, so Labour will suggest increasing the age for men and women to 66 in 2022, four years earlier than previously planned by Labour.

She will work with Labour peers Baroness Hollis and Bar – oness Drake on putting forward amendments.

Labour was criticised for its high turnover of pensions ministers while it was in Government, with the average tenure lasting just over a year.

Reeves admits that too many changes of minister can see continuity suffer.

She says: “Once you have built up a relationship with people and you understand your brief, obviously you are going to be better in the role but I think there are advantages as well as disadvantages.”

She says many of those who held the role went on to Cabinet positions and are now in the Shadow Cabinet and that having a lot of people with an understanding of pensions in the team is good for pension policy. She adds: “I am loving the job and hope to stay in the post for a long time to come.”

Reeves is also critical of the Government’s plans to switch pension indexation from the retail price index to the consumer price index, saying she has not seen evidence that CPI is a better measure of inflation and it is flawed because it does not take into account housing costs.

She says: “While it is true that a lot of pensioners do not pay a mortgage, if you look at other costs associated with owning a home, such as house insurance and council tax, they are not included in the CPI either.

“We would support the Government if it was proposing a temporary switch, as we recognise the need to deal with the deficit, but we see a permanent switch as a grab from pensioners.”

Prime Minister David Cameron put the book Nudge by Richard Thaler on a list of recommended reading for Conservative MPs over the summer of 2008 and it seems that Reeves is also a fan.

She says the nudge theory could be applied to the annuitisation process by making the open market option the default.

She says: “At the moment, a third of people go with their existing provider when they annuitise and all the evidence shows people would be a lot better off if they shop around for the best deal. As with autoenrolment, we could use the nudge theory with the open market option.”

Last October, pensions minister Steve Webb floated the idea of a flat-rate universal pension but the green paper on the reforms has been delayed.

Last December, Money Marketing reported that the Treasury is grappling with how to treat people who have accumulated contracted-out benefits in Serps and the state second pension.

Reeves says in principle she is in favour of anything that gives pensioners more money but she needs to see the details.

She says: “If we can see a proposal, we will be willing to work with the Government but it does not look like there is one forthcoming. It seems to have been kicked into the long grass.”

It has been a long-term ambition of Webb to bring in a flatrate pension and the Liberal Democrat manifesto aimed at introducing a single-rate citizen’s pension for current and future retirees.

Reeves says: “It does not seem to be going anywhere, which is disappointing and reneges on a commitment made before the election by the Liberal Democrats and Steve Webb in particular.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. If you going to equalise pensions at age 65 in 2018, then it would be logical to start to increase the pension age up to 66 from that point, how can you equalise things and still treat men and women separately

  2. Treating men and women differently has been the big problem for years. I quite agree that if the age is to be equalised to 65 at 2018 any increases to 66 should be for both men and women, otherwise it would be unfair to men.

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