The proposal has been dismissed as "incoherent" and "bizarre" by pensions experts.
Considering UKIP’s electoral base is largely drawn from the over-60s, you would think the party would have a carefully tailored set of policy proposels to woo this section of the electorate.
The importance of the so-called ‘grey vote’ is recognised by the three major parties, and is evident in the way they assiduously court older voters. Young people have felt the burden of the recession more than most yet last week’s budget gave the biggest boost to pensioners. And it makes sense that politicians behave in this fashion: older people vote, after all, whereas young people very often don’t.
Someone ought to tell UKIP’s new economics spokesperson this, however.
As well as suggesting that solar panels should be installed on pensioners’ homes (presumably to tackle the man-made climate change they don’t believe exists) and that the Bank of England should be abolished, UKIP’s new economics guru Steven Woolfe has called for the abolition of the state pension and its replacement with a private system.
The proposal has been dismissed as “incoherent” and “bizarre” by pensions experts.
Commenting on Woolfe plan, head of pensions research at Hargreaves Lansdown Tom McPhail said:
“There is nothing like a coherent and well-thought through retirement policy; and this is nothing like a coherent pensions policy,” Lansdown said.
Think tank Strategic Society Centre director James Lloyd also called the hairbrain scheme “bizarre”:
“This would take hundreds of years of strict public finances to have an impact. It is bizarre UKIP could be going after the state pension when its core voters are pensioners.”
As a result UKIP has already sought to distance itself from Woolfe, claiming his ideas were “never party policy and are not under consideration”.
Not that this is the first UKIP policy that’s bizarre or incoherent, of course.
22 Responses to “‘Abolish the state pension’: meet UKIP’s new economics spokesperson”
blarg1987
Two questions to your reply:
1 – On you last point, how would you enhance / structually change the state pension?
2 – Also since you said your ideas would reduce the amount the state would put into the pot over time, would the onus be on indervdiuals to put more of their own money into a pension scheme or the responsibility passed onto their employer?
Look forward to hearing your reply.
Steven Woolfe
Thanks Blarg its not the state pension itself that changes. That has to stay because any changes or new structures envisaged could not immediately supplant existing pension provison in providing for pensions to those paying in from the NI system or those who are not able to contribute through sickness or ill health and therefore reliant on the minimum they get from state pensions which are not a lot.
The problem with the NI approach is that people pay in today for a pension to the government through NI (or tax as most taxes are now comingled in some way for spending purposes). This funding isnt invested taxes are in effect paid out to existing pensioners. As there has been no investment those who paid in the past are reliant on those in work today paying taxes today. Current solutions say we need more and more young workers to pay for those who are pensioners now. It is recognised by most pension professionals this creates clear problems and isnt sustainable in the long run. Also the governments triple lock creates a huge unfunded burden estimated in the trillions of pounds
Recognising that the pensioners of today and tomorrow will still need recieve a state pension and the current system cant cope the govt have simply said we must do two things; increase the numbers of people paying tax and NI in at the bottom and raise the age of those recieving so they work longer.
There are potential solutions which have been suggested or successfully tried in other countries. They include building up govt investment portfolios such as state pension funds like Singpores Temasek Dubai/ Norway. The aim being that when they grow big enough they can contribute to the overall pension pot requirement and thus relieve some of the tax burden. Thats the reduction of the state part I was referring to. The principle problems are twofold ( there are some others of course). One is that you would need to invest taxpayers money now and for many years to build up a fund alongside. this means taxpayers arguablypay twice now. the second is that it takes some time (it has been suggested to me by actuaries 12 – 14 years before any benefit or distributions back to state pension fund could occur)
The UK would need to consider several of the variant options until we get to a stage where we state pension provision is not solely reliant (as it is now) ( or a preponderance) on deductions from tax revenues. of Therefore, other structures would also need to be added alongside. Some of these work in other countries e.g Australia, Singapore, Chile etc.
Actually, sorry Blarg forgive me, this is turning into a long missive. I think I’m going to have to finish the chapter of my book/ article on this or otherwise the whole structure will either be missed or I’m in danger of sending people to sleep on this site. Hopefully you can see I am not coming at this from a standing start or to be reckless. And no solution will ever be perfect but I do think we have to start considering different options. All the best and I think Ill have to leave it there.
Sorry again conscious that there maybe some who wish to suggest otherwise so I will have to put in a disclaimer. This discussion is not UKIP policy nor being considered. The ideas are purely mine in a genuine way to find solutions to my concerns about current UK pensions policy and procedure.
blarg1987
I get the jist of what you are saying, I assume you are saying in the short term taxation to be increased to pay out for current pensions and to create a long term pension fund that is sustainable in the longer term in your view?
I assume you are expecting the investment fund to break even in the longer term (12 – 14) years in your view. By which time you would reduce taxation?
Now I understand that, in the short term however where would you raise the revenue would it be general taxation or a new tax paid by a percentage of the population.
LB
Is Labour going to pay out on the state pension? That’s the key question.
If Labour, the Tories or Lib dems can’t honour the state pension, or the state pension is shit value, then UKIP have something better to offer.
http://www.if.org.uk/archives/2031/ons-reveals-full-uk-pension-liabilities
The results showed the extraordinary sums that Britain has committed to pay its future retirees. In total, the UK is committed to paying £7.1 trillion in pensions to people who are currently either already retired or still in the workforce.
So come on you tell us how you are going to pay 7.1 trillion when you have no assets.
LB
http://www.if.org.uk/archives/…
The results showed the extraordinary sums that Britain has committed to pay its future retirees. In total, the UK is committed to paying £7.1 trillion in pensions to people who are currently either already retired or still in the workforce.
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Come on, tell us how you can even pay the paltry amount due.