During the 1990s, the commentariat were calling for a consensus on pensions policy. That was the only way, it was argued, that we would ensure a long-term solution to pensions problems. We now have that consensus. And it is a consensus based around burying heads in the sand and ignoring the long term. Over the last 13 years, state income transfers to the elderly have been increased significantly; more pensioners than ever now receive means-tested benefits; and increases in state pension age are lagging well behind increases in longevity.
At the same time, there has been a relentless attack on private pensions. Company final salary schemes are regulated as never before – so there are now few schemes left to regulate. Gordon Brown’s tax changes led to the cost of funding a given pension increasing by about 10 per cent. In addition, the terms on which the government allows people to contract out of the second state pension, if they make their own private provision, have been steadily eroded and now bear no resemblance to a ‘fair price’. As savings rates have tumbled, the government has looked on with apparent surprise.
So what does the future hold? The Conservatives once had radical plans to allow people to opt out of the whole of the state pension system. Sa