Happy with the changes to the pension system made by the Coalition Government? asks Tony Watts OBE. Importantly, what else might be in the pipeline as we come up to the next election?

Your perspective on the pension reforms undertaken in the last couple of years may well depend on whether or not you are already in receipt of a pension – or still working towards retirement. Because there’s no question that the Government has had to draw a line in the sand and start somewhere, and some people may feel they’re on the wrong side of that line…

First the plaudits. The Coalition has addressed several ‘elephants in the room’ that previous Governments had signally failed to – not least the need for more of us to put more money away into pension schemes. Future generations will surely benefit from saving more and saving earlier, and let’s hope we don’t have a situation in 30 years’ time where the current pension savings are funding the current pensioners.

The reforms also provide a much simpler scenario, reducing (over time) the proportion of people dependent on means-tested benefits. The fact that so many means tested benefits go unclaimed is testimony to their inefficiency.

And the slavery of annuities has been addressed too – opening up the options for those entering retirement and making it (hopefully) a far more competitive marketplace. We should see a welter of new products coming through, making IFAs earn their corn. Here too you might feel miffed if you have recently been shoehorned into an annuity on a mediocre return, but again the reform had to start somewhere.

But of course, all this has had to be achieved with “no new money”. So while the flat rate pension has gone through far more quickly than anyone could have anticipated, it has been possible only because it is broadly cost neutral – today’s pensioners won’t be able to benefit from this because it would have added to the State Pension bill.

So it will feel very much like a two-speed system for years to come, and while the points will be made that the single tier is being paid for by SERPS, and that today’s workers are having to stay in work for longer, it will continue to rankle with some. Equally, it will mean that several million people will remain dependent on means-tested benefits – and still alarming amounts go unclaimed.  Just how can this conundrum be addressed?

The future sustainability of the State Pension is also heavily reliant on people staying in work for longer, a well as a growing economy.  Allied with the predicted rising cost of care in the decades to come, this still has to be an area of concern for us all.

So could the present Government have done more to help today’s pensioners? They will argue that pensioners have been one group that have had their benefits ring-fenced – aided by the triple lock. Even the bedroom tax/spare room subsidy does not apply. To have done more within the total current spending would have meant even deeper cuts elsewhere – with major political ramifications.

What next? In an election year, each of the parties will be sharpening their pencils to try and win over the grey vote. Each will be promising the triple lock for (at the very least) the next term. Going beyond that seems unlikely in the current climate, so where the gritty discussions may take place could be around universal benefits.

I can foresee the barricades being manned if there is a threat to the bus pass – here is more than enough evidence to show that the benefits go beyond financial, encouraging people to get out and about, so reducing isolation and improving wellbeing.

Expect some if not all of the parties to play hardball over winter fuel allowances. My best bet would be for them to be taxed, rather than removed.

What would irk many poorer pensioners would be seeing a country where they are locked out from the benefits of future economic growth and prosperity. The last few years have been hard for virtually all sections of our community, but older people (despite the propaganda) have taken some big hits on interest rates and many are missing out on the new reforms. Those on modest savings have been squeezed hard, and many more now face the prospect of paying for their own care than was the case even five years ago.

So while no one is advised to hold their breath, jam tomorrow if conditions allow is never the most appealing political offer, it might be the one bit of wriggle room available… the parties won’t forget which age cohort is most inclined to vote but will also have an eye on accusations of buttering up the grey vote.

Either way, the manifestos should make for interesting reading…

@tonywattswriter