Economics

[andrewducker]

The basic state pension should be replaced with a non-means tested alternative, the all-party Economic Affairs Committee said in its report.

The lords said putting less emphasis on means-tested benefits and more on the basic state pension would be simpler.

They also said it would encourage people to save more for their pension, without fear of losing entitlements.

However, BBC economics editor Evan Davies said the lords' proposed system, although simpler and fairer than the current one, "would, it has to be said, also be more expensive".

Which just about sums up the way that all benefits work.

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Comments

[bohemiancoast.livejournal.com]

The basic state pension is of course, not means tested; what they're proposing is that the link with NI contributions should be broken, so that people who neither work nor claim benefits should still gain an entitlement. (Note that people who don't work because they're unable to get a job and are looking for one, or who are sick or disabled, or who are caring for a child or for a disabled relative, already build up pension entitlement).

The word 'fairer' here rather depends on your perspective.

[andrewducker]

Aah, but numerous pension companies (he says, working for one and reading their white papers when bored) have said that the additional benefits should not be means tested. Doing so prevents middle class people from saving, because the gains from doing so are minimal or even non-existent (depending on how much they save).