Pension crisis is a top priority, says Johnson

10 Feb 05
Finding a blueprint to tackle Britain's looming pensions crisis is one of the major challenges Work and Pensions Secretary Alan Johnson has set himself, he told Public Finance this week.

11 February 2005

Finding a blueprint to tackle Britain's looming pensions crisis is one of the major challenges Work and Pensions Secretary Alan Johnson has set himself, he told Public Finance this week.

In an interview following the launch of the Department for Work and Pensions' five-year strategy, Johnson said that a 'huge change' was coming, in which 'the baby-boomers become the pensioner plethora'.

By 2050, there will be only two workers for every retired one, and by next year there will be more pensioners than children, he said. 'We cannot burden future generations with a load they cannot carry. We have to look ahead.'

Part of the solution lay in increasing the proportion of the population that is economically active. The five-year plan sets out reforms to the incapacity benefit system intended to make that happen.

But Johnson has also been vigorously floating the idea of a citizen's – or 'universal' – pension to tackle some of the inequalities in the present system. This is ahead of the second report from Adair Turner's Pensions Commission, due this autumn.

Although the government has been tackling pensioner poverty, through the pension credit and other measures, there was 'a way to go' he argued, and the causes of poverty in retirement still needed to be tackled.

'The state pension system was designed for a different age, when fewer women worked, and were dependent on their husbands,' he said.

A citizen's pension, based on a residency qualification rather than contribution levels, is one option he wants debated nationally.

Johnson also told PF that the most radical element in the five-year plan is the personalised level of service it offers claimants, such as the NHS working with DWP personal advisers to help incapacity benefit claimants back to work.

The CBI business lobby this week launched an attack on the concept of a citizen's pension. Director general Sir Digby Jones said the UK 'cannot afford' a flat-rate payment based on residency.

He suggested an alternative system involving a higher basic state payment and the retention of the second state pension for those without an occupational scheme.

PFfeb2005

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