Following recent announcements by Rt Hon Alistair Darling MP, Secretary of State for Work and Pensions, Falkirk West MP, Eric Joyce, has given his wholehearted support to the changes planned to reform the second pension, savings and benefits regime for Falkirk West pensioners.

Currently there are a number of pensioners whose ownership of a modest second (occupational) pension or savings puts them above the threshold for receiving the Minimum Income Guarantee or for receiving further help with housing and council tax costs.

The new Pension Credit to be introduced in 2003 will ensure that pensioners with small second pensions or modest savings will no longer face losing a £ in benefit for every £ of pension or savings that they have built up. For the first time in the history of the Welfare State, people will be rewarded for saving, not penalised. From age 65, people with incomes up to around £135 per week for single pensioners and £200 per week for pensioner couples will receive a ‘top-up' payment from the state.

The introduction of the Pension Credit will also have a positive effect on entitlement to additional help with housing and council tax costs with many pensioners receiving more help with these costs as a result and some pensioners becoming entitled for the first time to help with these costs.

Speaking today, Eric Joyce MP said

‘I am pleased that the Government has recognised that there were a number of pensioners who were effectively being penalised for contributing to an occupational pension throughout their working years or for putting away small amounts for a rainy day.

I am even more pleased that the planned changes will not only remove the penalty which those pensioners faced, but that for the first time in the history of the welfare state, people will be rewarded for being thrifty and saving for their later years.

Corresponding changes to the benefits regime will also ensure that pensioners will not lose out because they have second pensions or modest savings. Many pensioners right here in Falkirk West will receive additional help with Housing and Council Tax costs with many more receiving help for the first time to meet these costs.

These measures will provide, on average, a further gain to pensioners of some £400 per year and mark another great step forward in the fight against pensioner poverty.'

Notes to Editor

• The Pension Credit is designed to replace the current Minimum Income Guarantee and bring together almost all forms of financial support and assistance for pensioners. By the time it replaces the MIG in 2003, it is estimated that 3.9 million pensioner households across the UK stand to gain. This corresponds to some 5.1 million pensioners.
• The maximum ‘top-up' reward from the state for pensioners who have second pensions of modest savings will be around £13.80 per week for single pensioners and £18.60 per week for pensioner couples.
• The Savings Credit element of the new Pension Credit will give pensioners a cash addition of 60p for every £1 of income they have above the level of the Savings Credit Threshold (which is expected to be around the Basic State Pension) up to a maximum of £13.80 per week for single pensioners and £18.60 per week for pensioner couples. After this, the maximum reward will be reduced by 40p for every £1 of income above the income guarantee so that pensioners with incomes up to £135 per week for single pensioners and £200 per week for pensioner couples, will benefit.
• The introduction of the Pension Credit will abolish the rules excluding pensioners with £12,000 or more of savings from any help and anyone with savings of less than £6,000 will have those savings completely disregarded in means testing for housing, council tax and other benefits. Ignoring any income from savings below £6,000 means that 85% of pensioners getting pension credit will see any income they receive from their savings ignored entirely.
• If a pensioners only source of income over and above the Basic State Pension level was from capital, a single person would need at least £35,000 of capital and a couple would need at least £44,500 before they lost entitlement to Pension Credit.
• On average, pensioners will gain just over £400 per year from the Pension Credit. This is the average gain from the savings credit and changes to the income assessment (like the new capital rules) and includes the average gain in Housing Benefit and Council Tax Benefit.