The battle for pensioners’ votes begins with Cameron on Liberal Democrat turf

The latest Ashcroft polling shows that the Conservatives have a long way to go to be within a shout of victory, with 37% of those who voted Tory saying at the moment that they would not do so if there were an election tomorrow. It’s hardly surprising, then, that David Cameron kicks off the next stage in the 2015 election campaign, in an interview with today’s Sunday Times (£), by pledging to stick to one of the Coalition’s most successful policies through another Parliament.

The Tories have previous for trying to claim the credit for a Liberal Democrat policy. Last year, they were all over the raising of the income tax threshold, when their tax policy had actually been to give a massive cut in Inheritance Tax to the significantly wealthy.

Steve Webb’s triple lock in pension rises has delivered a succession of decent cash rises in the state pension, which has risen from £97.65 a week in 2010 to £110.15 in 2013. This is a Liberal Democrat policy through and through. It’s hardly surprising that Cameron wants to cloak himself in it in an attempt to get pensioners, that group of the electorate most likely to vote, to vote Tory.

Actually, voting Liberal Democrat is a much more sensible solution for that group of people. Steve Webb said when we interviewed him at the Social Liberal Forum Conference in Brighton that he would love to be in a position to extend the triple lock into the next Parliament but that would have to be part of the manifesto development. Isabel Oakeshott says in her analysis(£) that Steve had cast doubt on its appearance in the Liberal Democrat manifesto. Actually, what he said was that we had yet to decide which is clearly quite different.

It will be interesting to see how Labour react to this move, but I think that the real issue is not about the triple lock. It’s about pensioner benefits like the Winter Fuel Allowance and free travel. Nick Clegg has repeatedly said that if further cuts in welfare were on the agenda, they’d have to come from wealthier people. It is utterly ridiculous that my husband is eligible for the Winter Fuel Allowance when we really don’t need it. Ed Balls has said that Labour would remove it from wealthy pensioners. Cameron made it a prime Tory pledge to preserve these benefits in 2010. If he makes the same pledge in 2015, he weakens his argument that spendthrift Labour can’t be trusted with public money.

But these battles are for another day. Steve Webb is still in office making changes better for pensioners here and now. Having guaranteed the triple lock and made sustainable, long term changes to the State Pension and ensured that everyone has access to a workplace pension, he’s now tackling the annuities market in a very liberal way. He wants to give people the choice to move their annuities if they can get a better deal elsewhere, as he told the Sunday Telegraph:

When you take out a mortgage, in a few years if rates change you can switch your mortgage,” he said. “But when you take out an annuity, that’s it – for life. This could easily be for a quarter of a century.

Why shouldn’t you be able to change your annuity provider so a few years later somebody else could offer you a bigger pension?

Why shouldn’t you be able to shop around?

He also talked about ending “murky” practices and ensuring that charges are transparent.

There are almost murky things at the point where you buy an annuity,” he said. “There are odd percentages going in funny places for no good reason.”

He called for greater clarity in the charges insurers make when selling annuities.

We need to ensure it’s transparent,” he said. “This is a complicated transaction for many people. The industry understands this stuff, the public don’t.

I think lottery is a fair word. We are worrying about charges, but if the outcome at retirement can differ by 15 to 20 per cent or more just because of who you go to, that’s a huge difference and so there can be an element of a lottery in that.

 

 

* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings

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20 Comments

  • “When you take out a mortgage, in a few years if rates change you can switch your mortgage,”

    Well… I thought we were all in favour of longer-term fixed mortgages? If annuity rates are not going to be fixed, then if interest rates fall pensioners will be forced to survive on less money ( I don’t see how you could have a system where one can fix the rate, even if it falls, but if it rises one can switch). That seems against the whole spirit of pensions.

  • Simon McGrath 5th Jan '14 - 12:51pm

    ” I think that the real issue is not about the triple lock. It’s about pensioner benefits like the Winter Fuel Allowance and free travel”

    Well no. We should certainly look at restricting those benefits to those who need them but the triple lock is hugely expensive – taking away winter fuel and free travel is insignificant in the total costs. If we are to get into the bribing the voters game we have to say where the money will come from – essentially where else would we cut to pay for this ?

  • Stuart Mitchell 5th Jan '14 - 1:27pm

    @Caron Lindsay
    “The Tories have previous for trying to claim the credit for a Liberal Democrat policy. Last year, they were all over the raising of the income tax threshold, when their tax policy had actually been to give a massive cut in Inheritance Tax to the significantly wealthy.”

    To be fair to the Tories, both the coalition agreement and the first coalition budget in June 2010 stated explicitly that the first stage of the allowance rise would be financed by money that had been intended to be used for the Tories’ planned raises in national insurance thresholds. So I think it’s legitimate for the Tories to claim *some* of the credit for the increased allowance, though I agree they are being cheeky trying to claim it all.

    Incidentally, the Tory manifesto made clear that part of that money was to come from the cuts in tax credits that did in fact transpire. So as I correctly pointed out the other week (though Simon Shaw tried to rubbish it), the increased tax allowances have certainly been partly financed by the cuts in tax credits.

  • Tony Dawson 5th Jan '14 - 2:31pm

    I do not think it is a matter of ‘successful Lib Dem policies’b being pinched by Tories as theirs.

    Ask a dozen pensioners and how many would realise that this policy was Lib-Dem originated? And what, exactly, did the Lib Dems do in the first three years of the Coalition to help the people of this country differentiate such matters?So the pensioners, like the press, think this is a Tory Coalition government policy, which ‘shortens’ to ‘Tory policy’. 🙁

  • Graham Martin-Royle 5th Jan '14 - 3:44pm

    I read in todays Sunday Times an interview with Cameron where he’s claiming that it’s the conservatives who are giving tax payers a £700 boost by raising the income tax threshold. Funny that, I could have sworn it was LibDem policy.

  • Matt: “I don’t see how you could have a system where one can fix the rate, even if it falls, but if it rises one can switch.” This is how US mortgages work. You could have annuities working on the same basis. (Options contracts more generally work like this – you have the option to do something at all times, but are not obliged to. Permanent jobs are like this as well – you have the right to leave if you get a better offer elsewhere).

  • Eddie Sammon 5th Jan '14 - 4:42pm

    Steve Webb makes me angry. He used massively fudged figures to attack the pensions industry, he’s now trying to use emotive language calling the annuities market a lottery when there are plenty of price comparison websites; his Triple Lock is an unfair bribe and he made out his flat rate pension was a rabbit out of the hat when it is in fact being paid for by taking having a combination of winners and losers, some of which will be poor.

    There’s a lot of dishonesty in his work and he should start to make up for this by apologising for using 7% investment growth and 0% inflation in his forecasts for pension charges. He did say it never included inflation, but why not? The only reason was to pump up the headline figure.

    This is also why politics should be about the individual and not the party, because people are so different.

  • Eddie Sammon 5th Jan '14 - 5:13pm

    If Steve Webb wants consumers to be able to cancel their lifetime annuity contracts then there should be cancellation charges. We can’t have a situation where the consumer can cancel their contracts when interest rates go up, but providers can’t cancel if interest rates go down. This would wreck the industry and goes against the principle of insurance. However he doesn’t talk about cancellation charges, because he’s fishing for votes.

  • Tim – yes, I was going to give that example as that provision of US mortgage system is widely thought sub-optimal (e.g. http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/06/us-fixed-rate-mortgages-arent-fixed-rate-mortgages-they-are-weird-stupid-and-dangerous.html#more).

    And even if it is a good idea then options cost money, and that’s paid presumably either in (for mortgages) higher rates, or in this case lower pensions and/or state subsidy.

  • This piece here (linked to in that previous post) on US mortgages makes the two points with some numbers – 0.25% to 0.5% additional interest per year. Even if reaches lower end on pensions that could make big difference to average return.

    http://blogs.wsj.com/developments/2010/06/14/radical-ideas-from-a-federal-housing-bureaucrat/?mod=wsj_share_twitter

  • Eddie Sammon 5th Jan '14 - 5:40pm

    I tell you what is one of the most frightening things about Steve Webb’s article: this reform he is considering:

    “A new system of “collective pensions” in which millions of private pensioners would keep their savings invested in the same “mega fund” while they were working so their money grows with their investments”

    So let’s get rid of encouraging choice and competition and go into state control of millions of people’s pensions, undoubtedly damaging many businesses.

    Attacking business wouldn’t be so bad if we had a strong welfare state, but we don’t, which is why many private sector workers can’t stand a minister making industry wide attacks for some populist pensioner votes. Attack the bad guys, and the liberal position is not that all businesses are bad so the state should manage things instead (collective pensions).

    Right, the end, you don’t see me making the same attacks on Vince Cable, so it’s not just because Steve Webb is on the left.

  • Eddie Sammon 5th Jan '14 - 5:56pm

    Maybe populist is the wrong word for Steve Webb and that he just wants to help pensioners get a better deal, but these proposals are far too anti business and of the authoritarian left to become Liberal Democrat policy.

    Matt points out similar concerns to mine in the first comment on the article.

  • David Evans 5th Jan '14 - 9:10pm

    I think Caron is right when she says these are our policies, but the problem is very few people know about this and the party nationally has been atrocious at publicising that they are. As Tony Dawson says “what, exactly, did the Lib Dems do in the first three years of the Coalition to help the people of this country differentiate such matters? So the pensioners, like the press, think this is a Tory Coalition government policy, which ‘shortens’ to ‘Tory policy’.”

    It is becoming more and more clear that Cameron is getting ever better than Nick in portraying his party as the success in government. Today on the Marr Show, he made it very clear on more than one occasion that he kept his promises: a clear dig at Nick failing to keep to his pledge. We really have a long and very difficult campaign up to the next election.

  • andrew purches 6th Jan '14 - 10:26am

    Of course Cameron will be stealing all the credit for the coalition policies, both good and bad, liberal and illiberal from his junior partners in government. Who would not ? The great problem that the Lib Dem’s face and will face even more so as the months roll by up until the next election is that is that no one really knows who has done what and who to thank, for many of the policies that originated in what was Cowley Street. The only things that are remembered by the electorate at large are, sadly, the broken promises that are blamed entirely on our leader. And even those cabinet ministers who are making policies that are of Lib Dem origin seem incapable of making themselves seem personally responsible for what they do. Vince Cable being perhaps the only exception. The whole concept of co-alition has totally swamped any degree of individual input by the junior partners in this government, and we have been totally unable to make this clear. Perhaps we should withdraw from this agreement, be able to fight the Euro Election without having to have our hands tied behind our backs. And, going back to Pensions, in no way can anyone live on the current state pension alone ( and I know,having to still work full time for my living at the age of 75 ) and who is Steve Webb any way? The man / woman in the street, has no idea who he is, ” one of them civil servants” to quote one villager to me this morning. Enough said!

  • Jayne Mansfield 6th Jan '14 - 10:36am

    I can see the electoral advantage in trying to buy our votes, but some of us OAP’s who are comfortably off are more concerned about the less well off pensioner, the poor , including the burgeoning number of working poor and young people, than attempts to buy our votes.

    Thats the problem with politicians, they are so surrounded by the greedy who confuse want with need, and for whom enough is never enough, that they have lost sight that for many, I hope a majority, there is still a sense of decency and concern for those who are less fortunate .

  • Peter Chivall 6th Jan '14 - 3:47pm

    I think I’m a better-off pensioner. I grew up in the days when it was possible to be employed in the public service on the basis that ‘you may not earn much but you’ll get a decent pension’ . In the ’70s, ’80s and ’90s our cars were mostly ‘hand me downs’ from my wife’s family, maintained by me, and we never had an overseas holiday once the children came in the ’80s. My children had adventuruous holidays courtesy of a children’s educational charity (but still some fees part paid by us), because my wife and I worked as volunteer leaders with the charity.
    I was fortunate to get a ‘breakdown’ pension at the turn of the century when consultants certified I was unfit to conitue teaching. When I divorced, my ex-wife got the house, I got the pension, but I was able to buy my own house and pay off the mortgage later only because of an inheritance from my late mother.
    Your respondents above will probably rail at me as some sort of ‘welfare scrounger’ because I was employed in public service and have a public service pension, Whereas I detect more than the whiff of self-interest in the complaints of apparent private pensions consultants against Steve Webb and his attempts to prevent millions of younger workers ending up with no pensions provision but the state pension. It is sad how much Thatcherite neo-liberal values have come to infect some sections of our party.
    As for the current state pension, the ‘triple lock’ is an attempt to recompense state pensioners, particularly the more elderly, for the decades of being ‘left behind’ after Thatcher cut the link between pension rises and increased incomes in the ‘fat years’ of the ’80s and ’90s while New Labour forced many to claim Pension Credit or cope with a 50pence increase. I’m not surpised that Cameron has tried to claim the idea as his own.
    The implication of some comments is that the ‘triple lock’ and the more generous pensions that result are unaffordable because of the increased longevity of older people. However, the increasing later eligibility for state pensions has been based upon actuarial assessments which should cover this eventuality.
    Of more immediate interest is the anomalies inherent in the Winter Heating Allowance. I cannot see any logic in making it available of right to UK pensioners living in Marbella (or Florida, or Australia for that matter.) If EU law prevents limiting its payment to any of the 1/3 million UK ex-pat pensioners by place of residence, then perhaps it could be defined by those countries or regions where average daily maximum temperatures from November to March are below, say, 7.5deg Celsius.
    Since it is effectively a universal benefit, why not roll it up in the state pension, giving us all an extra £5 a week, thus making it taxable. Thus those on less than £10,000 combined pension income would pay nothing, someone like me on about £20,000, would pay 20% of the Winter Heating Allowance portion in tax, and those on higher rate tax accordingly.
    Finally, since WHA is effectively a subsidy for fossil fuel burning at present, why not allow pensioner households to commit their WHA for the next ,say, 5 years, with a Government premium of a 6th year’s worth to help fund any Green Deal scheme and reduce the effective Interest Rate from the current 7% offered by green Deal contractors to something more affordable (and reduce the CO2 output of those pensioners’ homes in the process.)

  • Eddie Sammon 6th Jan '14 - 4:23pm

    Peter Chivall, I have to correct you on this paragraph:

    “Your respondents above will probably rail at me as some sort of ‘welfare scrounger’ because I was employed in public service and have a public service pension, Whereas I detect more than the whiff of self-interest in the complaints of apparent private pensions consultants against Steve Webb and his attempts to prevent millions of younger workers ending up with no pensions provision but the state pension. It is sad how much Thatcherite neo-liberal values have come to infect some sections of our party.”

    First of all I’ve never heard of any Lib Dems calling people in receipt of public sector pensions scroungers. Second and most importantly, there is absolutely no self-interest in my comments because I charge fees for financial advice and couldn’t really care if we got rid of private pensions entirely. However, what I do want to see is principled arguments and not lazy accusations of rip offs and false comparisons between limited term mortgage deals and lifetime annuity contracts.

    I also think Thatcherite neoliberalism leads to basically serfdom, so you are wrong with that attack too.

    I was chatting to a branch manager for HSBC on New Years’ Eve and we both agreed that government regulations had made things worse for the consumer. The government seems intent of getting us to explain every little detail to the consumer, when what most of them want is the basics and the ability to sue if we mislead them.

    I’m in favour of regulations, but I’m not in favour of deciding to kick an industry because it gets a cheer from the left.

  • Stuart Mitchell 6th Jan '14 - 7:51pm

    @Simon Shaw
    “As I said before it is meaningless in fiscal matters to say that ‘A pays for B’. I know that politicians say it is what is happening, but that doesn’t make it so.”

    If it’s “meaningless” to say such things, why do you do it yourself?

    https://www.libdemvoice.org/welcome-news-from-vince-cable-on-pensions-21765.html#comment-148714

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