Pension reform still to be addressed

Harriet Harman may have gone but the pressing problems of pension reform and long-term care for the elderly remain

TONY BLAIR has signalled his displeasure at the slow and uncertain progress of welfare reform by "resting" Harriet Harman. But will Alastair Darling do any better? Welfare to Work is taking its first hesitant steps but, as everyone but Gordon Brown can see, its success or failure depends on whether the economy continues to grow fast enough to create more jobs and offset the increasing number of redundancies now being created, especially in the manufacturing sector.

The crackdown on benefit fraud is at an even earlier stage of development, and depends essentially on better co-ordination of records between different government agencies.

The poorest pensioners and sick people on waiting lists will be catered for in the spending plans announced last month. But that still leaves pension reform and long-term care as urgent policy priorities for Mr Darling to tackle. Even before the possible need for mandatory membership of a private pension has been debated, plans to make private pension plans available for everyone have run into difficulties and need a fresh approach.

Government proposals are rightly being criticised because they imply that managed pension funds that are not eligible for official approval are not as good as tracker funds, which do qualify. There is also a serious risk that novice investors will take the proposed kite-mark as a kind of financial guarantee, which is even more dangerous.

Mr Darling needs to start again, and to introduce a one-star rating for all pension plans that offer low and easily understood charges. Equally important, he must make it clear that three-star status is something that can be attained only after years of successful investment by a company. It simply cannot be earned in advance.

The other task for welfare reform is how to pay for long-term care for an ageing population. The Royal Commission set up by the Tories is due to report by the end of the year. It will probably come out in favour of a version of the partnership plan, whereby anyone who insures for the cost of two or three years in a home will then qualify for state aid if they outlive their insurance policy.

But that will not necessarily persuade people to take out either pension plans or LTC policies. Experience shows that about 20 per cent of people are convinced that they will not live long enough to enjoy a pension, and that if they do, the state will provide for them at the expense of both current taxpayers and those pensioners who have paid for their own future.

Four out of five people die before they qualify for acceptance into an old people's home. That is why only about 5,000 new care policies were sold each year, even though 40,000 people are being forced to sell their homes to pay for care. The fact is that spending money now to buy pensions and policies that they may never need, or live to benefit from, is a double turn-off for many people.

The only way to increase the take-up of these vital elements of welfare reform is to market combined life assurance, pension, care and investment plans that guarantee to pay back some capital if the pension and long- term care are not needed. Even that will require some clever marketing, and a guarantee that the charges are as low and as clear as possible. Such policies will also need tax sweeteners, including tax relief for people to buy plans to pay for parents who are already too old to buy their own policies to protect the family home. That is where Mr Darling should be targeting his priorities, as soon as he possibly can.

Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Arts and Entertainment
The sight of a bucking bronco in the shape of a pink penis was too much for Hollywood actor and gay rights supporter Martin Sheen, prompting him to boycott a scene in the TV series Grace and Frankie
tv
Arts and Entertainment
Lena Headey as Cersei Lannister
TVSPOILER ALERT: It's all coming together as series returns to form
Sport
footballShirt then goes on sale on Gumtree
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
Voices
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvName confirmed for third series
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
art
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Guru Careers: Software Developer

    £35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

    SThree: Trainee Recruitment Consultant / Resourcer

    £18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

    Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

    £25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

    Day In a Page

    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf
    From Shakespeare to Rising Damp... to Vicious

    Frances de la Tour's 50-year triumph

    'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
    'That Whitsun, I was late getting away...'

    Ian McMillan on the Whitsun Weddings

    This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
    Kathryn Williams explores the works and influences of Sylvia Plath in a new light

    Songs from the bell jar

    Kathryn Williams explores the works and influences of Sylvia Plath
    How one man's day in high heels showed him that Cannes must change its 'no flats' policy

    One man's day in high heels

    ...showed him that Cannes must change its 'flats' policy
    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine