Pensioners in the UK suffer from a high degree of inequality. How could a Wellbeing pension change that?
• This report argues that the current system does not provide enough support for pensioners in their retirement and is especially unfair to those who have been retired for longer and are on the Basic State Pension and living as a couple.
• This report presents the concept of a Wellbeing Pension, calculating the amount required to act as a starting point (as base level of public pension) to ensure that all pensioners receive an adequate income throughout retirement to live with dignity and end the pensioner poverty levels caused by the inadequacies of the current UK pension system.
• This report builds upon and updates the original analysis carried out in 2019 by Scotianomics (Emma MacPharlane/ Gordon MacIntyre-Kemp) for the campaigning Scottish business network ‘Business for Scotland’. To calculate a Wellbeing Pension, we also draw upon the subsequent analysis of the Minimum Income Standard for pensioners from the University of Loughborough and the Joseph Rowntree Foundation, as well as statistics on average expenditure. Using this research, the report sets out case studies of particularly vulnerable groups of people in retirement.
• Our analysis suggests that the Wellbeing Pension should start at £225 per week to build a pension scheme that meets just the basic needs of pensioners.
• Before calculating the Wellbeing Pension, this study examines the UK’s state pension, recognising that the UK Government’s nomenclature of the “new” state pension disguises the fact that the vast majority of pensioners today continue to receive the “old” or “basic” rate - which continues to be the one of the worst state pensions in the developed world.
• The UK Government’s suspension of the Triple Lock Guarantee in the spring of 2022 not only broke a Conservative Party Manifesto commitment but meant that pensions suffered a real-terms income cut of up to 6 percent. Even a subsequent rise at the same rate as inflation in future budgets will not restore the buying power pensioners possessed prior to the breaking of the triple lock.
• Pension policy is reserved to the UK Government. We recommend that the UK Government adopts the Wellbeing Pension and show that this increase in the pension can be funded through current National Insurance Contributions.
• The Scottish Government has no power to alter pensions policy. However, it has shown a desire (were it to gain those powers) to improve the state pension and adopt a wellbeing economic approach. Therefore, we recommend that this concept of a Wellbeing Pension is incorporated into both the Scottish Government’s recommendations to the UK Government on UK pensions, as well as any future manifesto commitment to pensions levels in an independent Scotland.