Pension changes ‘appeasing Ukip’

Dr Ros Altmann, a former pensions advisor to Tony Blair and regular contributor to the Yorkshire Post Opinion pages, spoke out after Pensions Minister Steve Webb signalled a curb on people living abroad who are able to claim UK state pensions through their British spouses.

The leading Liberal Democrat – Iain Duncan Smith’s deputy at the Department of Work and Pensions – says there are 220,000 people living outside the UK who receive some form of state pension based solely on their spouse’s British work history.

Given that this costs £410m a year, and a time when Ministers are under pressure to cut benefits to senior citizens by introducing means-testing, Mr Webb says the Pensions Bill – one of the centrepieces of tomorrow’s Queen’s Speech – will stop such anomalies.

“Most people would think, you pay national insurance, you get a pension.

“But folk who have never been here but happen to be married to someone who has are getting pensions,” he said.

“Women married to British men, we are getting more of them claiming a pension based on his record.

“In some cases, they have never set foot in Britain at all.”

However Dr Altmann believes it will be very difficult for the Government to impose this law under EU legislation, even though she welcomes plans to introduce a flat-rate pension for everyone to simplify existing policy.

“It is hard to see how the Government could single out overseas claimants if they live in the EU and treat them differently from UK citizens. That would be illegal,” she said.

“Of course, it makes sense to move to a state pension system where each individual builds up their own state pension rights.

“However, it is also important that spouses who relied on a partner’s pension contributions many years ago are not robbed of their rights.

“Many older women, especially those currently in their later fifties, were not able to build-up pensions of their own because the state and private pension system conspired against them.

“Those who are already receiving the pensions will continue to do so and there need to be safeguards for genuine claimants too. But the Government cannot suddenly change the rules on those reaching pension age after 2016 if they have always relied on receiving a pension based on their husband’s contributions.

“The pension reform is supposed to provide transitional protections for the older women who did not have a chance to build up their own pensions. “

She explained: “Our state pension system was set up in the 1940s, when most married women stayed at home, were not allowed to join their company pension scheme if working part-time and were encouraged to pay a special ‘married women’s National Insurance stamp’ that, unbeknown to most of them, meant they had no rights to a state pension of their own at all.”

As for Mr Webb’s comments, she added: “Paying 220,000 overseas residents a state pension of £3,500 a year is money that does nothing for our economy, but it is not clear that the UK can just stop paying future claimants.

“In the rush to appease Ukip supporters, it would be really wrong for Ministers to suddenly change the rules and take away pension rights from older women. Yes, change is needed, but it must be managed in fair and carefully considered manner.”