Pensioners are once again under attack.
The Department for Work & Pensions Select Committee has called for the triple lock on the state pension to be abandoned. Meanwhile the Centre for Policy Studies has come up with the bizarre suggestion the pension should only automatically be paid to the over-80s.
Both ideas come from highly-paid professionals who have no idea what it is like to live on £119.30 per week – the level of the basic state pension for those who retired before April 6 this year.
The reality is the state pension has been playing catch-up from years of real terms decline after Margaret Thatcher tied it to prices in 1980.
The triple lock – which guarantees it will rise in line with the consumer prices index, wages inflation or by 2.5 per cent each year – has gone some way to achieving this, but there is further to go.
At its peak in 1978 the basic state pension was worth more than a quarter of average earnings. By 2009 it was worth a little over 15 per cent.
Today, the pension is just over 23 per cent of the national average wage of £504 per week, putting it at levels last seen in the 1980s.
So the job is not yet done. Estimates have suggested that maintaining all elements of the triple lock – and especially the 2.5 per cent commitment – could be unaffordable.
Yet by next year this could become irrelevant as inflation is expected to surpass about 4 per cent.
This was the case from 2003 onwards when the Labour government’s policy was to increase the pension by at least 2.5 per cent a year at a time when the retail prices index – which at that time provided the other link – was always higher.
So what of the CPS suggestion of an over-80s state pension with means-tested support to plug the gap for the over-65s.
Let us consider who would benefit most from this: well, higher-income individuals with longer life expectancies – rather like those who wrote the report.
The fact is that take-up of means-tested benefits among the elderly can be worryingly low. And those most in need often miss out.
Fewer than two-thirds of those entitled to pension credit had actually taken it up in 2013/14 according to the DWP. Figures for the early years were even worse.
Aside from this, the whole point of introducing a flat-rate pension was to move away from means-testing. From day one the state pension has been a compromise between need and affordability. It is not funded so we must bundle together the best package we can. The triple lock may become unaffordable, but pensioners too often make an easy target for those who could afford to pay more tax themselves without blinking an eyelid.
Cheers to Fevertree
As an (extremely) amateur investor, one of the things that frustrates me most is missing an opportunity that is staring me in the face.
One of these is Fevertree Drinks. Mrs H likes the odd gin and tonic especially with the increase in varieties.
My elder stepson and daughter-in-law have become connoisseurs. When I go to out for a meal, as often as not at least of couple of people will order a G&T.
And what do they always request? Not Schweppes, but Fevertree. The drink has become a phenomenon in Middle England (I’ll leave the Scots to their whisky), yet I failed to translate the trend to my investment portfolio.
Last week the shares rocketed 11.7 per cent on one day after the company upgraded its profits forecasts.
From a launch price of £1.34 per share it had last week reached £10.82.
I just hope a few of the talented fund managers I pay so much to do the research and buying on my behalf slurped up some Fevertree along the way.
Trigger rate
There is growing pressure for low-paid workers to be given equal access to pensions through auto-enrolment.
The Pension Policy Institute has made the reasonable argument that the £10,000 a year earnings trigger discriminates against women who make up 81 per cent of the part-time workforce.
I can not think of a sensible argument against lowering the trigger rate except that, among older women, the amount of pension earned could be pitifully small.
Factor in the cost of administration for the employer and both might be better off by simply handing out a pay rise.
Tony Hazell writes for the Daily Mail’s Money Mail section. t.hazell@gmail.com
