High Peak Liberal DemocratsWe have also restored the link between the Basic State Pension and earnings which was broken thirty years ago. Labour had thirteen years to do it themselves and did nothing. Our 'triple lock', to increase pensions by the highest of earnings, prices or 2.5% will benefit a typical newly-retired pensioner by around £15,000 during their retirement. We are committed to the state pension, and committed to improving it.
But we also need a state pension system that works for those who have yet to retire and who will be facing a very different world. They will, on average, be working much longer and be retired longer than their parents and grandparents. Workplace pensions are far less generous than they were in the past. Few young workers are saving anything at all for their retirement. We need to put a system in place fit for the future.
A flat-rate state pension worth £140 per week in today's money will provide a firm foundation for saving. This is crucial as we go through the process of automatically enrolling millions of workers into workplace pensions. They will be free to opt-out, but their employer will put money in, they will put money in, and tax relief will go in. People need to be confident though that their savings won't be swallowed by means testing. A flat rate pension set above the rate of the means-test means you can be confident that it will pay to save.
Those who were heading for pensions below the poverty line stand to benefit most from this reform. It will also end the penalties facing women who stop work to bring up children or care for a family member. While those years are credited for the Basic State Pension, no provision was made for them prior to the introduction of the State Second Pension. It is time their contribution to society is fully recognised in the state pension. A year spent caring for a child or elderly relative will be worth the same as a year spent running a global corporation as far as the state pension will be concerned.
The idea of a single decent pension is of course nothing new to party members. This proposal is very similar to ideas that we as Liberal Democrats have talked about for years. The fact that the Government has now included this idea in a Green Paper shows the difference we are making through being in the Coalition. We are not just talking about good ideas but are actually delivering them within government and it is a huge privilege to be a part of that process.