Ben Simmons: Why a Basic Income could be the answer to the big pension problem

CommonSpace columnist Ben Simmons makes the case for a radical redesign of the welfare system and how we view it

AT THE recent Scottish Independence Convention conference, Jim Stamper of Pensioners for Yes gave an excellent account of the challenges facing the independence movement when it comes persuading pensioners to vote for change.

One of the most shocking points was that No voters are over-represented among pensioners because those disadvantaged by the status quo simply die much sooner.

The extent of this health inequality is a criminally neglected part of the national discussion and should be a source of outrage for every one of us regardless of our views on Scotland as an independent nation.

READ MORE: The basic income: Can it really work or is it all just a pipe dream?

Addressing inequality means fighting a hydra of ideology and economics, a fight that is fiercer every year of our voluntary austerity. The worst of all possible solutions is to do nothing at all and pretend that the pension age is nothing to do with how soon the government thinks you will die, and that it isn’t a lifeboat to be subtly rowed away from those unfortunate to live their lives below deck.

People in the most deprived communities in Scotland now face many more years of unemployment and ill health before receiving a pension, with the effect that a raised retirement age is a targeted sanction against those least likely to find work and with the lowest expected lifespan.

Bringing money into these deprived communities is essential because it brings with it security, freedom from sources of ill health such as stress and anxiety, and freedom to contribute to the community and local economy. 

Universal credit, while not wildly popular or well thought out, at least has a reasonable goal of simplicity of administration. Ideally, when it is easier to access support more people will be able to get the support to which they are entitled.

Unfortunately, the benefits system as it stands is inflexible, and deters those receiving support from seeking work through both a high rate of withdrawal (effectively slashing your hourly pay), and sanctions if you make a mistake trying to declare your situation. 

READ MORE: Think-tank research chief hits back at Tory attack on a Scottish Basic Income

Giving up even a meagre sense of security to work for what is basically a fraction of the minimum wage on a zero-hours contract is not only unattractive, it is almost immoral if it risks the wellbeing of any dependents.

There is an alternative with a growing profile internationally, but especially in Scotland. A Basic Income is the idea that every citizen receives the same amount of state support each month to ensure that poverty can be avoided. 

We figure out what we as a society wish the bottom rung to look like, and design a welfare system to make sure that no one can descend any lower, regardless of circumstance. Like universal credit this would mean replacing the complex web of benefits with a simple to administer, non-means-tested payment to each citizen.

There would still be a few selective benefits, such as disability benefits and housing benefit, and an infant would not receive the same as someone in retirement, but by and large we would all be able to live in dignity. 

The net result is that unpaid work is recognised and rewarded, your income is not threatened by finding work, and financial dependency becomes a thing of the past.

READ MORE: 5 ideas from the launch of Scotland's Basic Income Network

Many different funding models have been proposed to fund such a system, from sovereign wealth funds, to a flat tax on earnings. A new book launched this summer takes an exhaustive look at how such a scheme could be implemented in Scotland, and pilot schemes are already being discussed in Glasgow, Ayrshire and Fife. 

If you’re interested in learning more, Citizen’s Basic Income Network Scotland (CBINS) is raising awareness among the public and within governments about the positive change welfare reform would bring, and several reports have been published by both thinktanks and political parties on the topic.

As the prospect of retirement and the financial security of a pension becomes ever more elusive, it may seem counter-intuitive to suggest implementing something that looks a bit like a pension for everyone from birth. 

But the truth is that we need to abandon our idea of retirement as freedom from poverty for those that have earned it, and recognise that freedom from poverty is something that we all deserve.

Picture courtesy of Garry Knight

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Comments

Nelson

Thu, 11/09/2017 - 09:09

So, the challenge of what to do to stop old people starving and freezing because it is perfectly normal in our society for their families not to bother looking after them is to give their families money?

And what on God's earth has that got to do with persuading pensioners to vote for a geographical shuffling of some politicians, none of whom are in favour of giving everyone money, regardless of need?

MauriceBishop

Thu, 11/09/2017 - 13:37

"One of the most shocking points was that No voters are over-represented among pensioners"

Why is that shocking? After independence Scottish pensions would be paid by the independent Scottish state, which is going to be having any number of money problems. So independence supporters make up stories about how, really, the UK will volunteer to keep on paying the pensions, so there is nothing to worry about.

bensimm86's picture

bensimm86

Fri, 11/10/2017 - 11:54

Hi Nelson, thanks for your comment.

A basic income is not about 'giving their families money', it is paid to each individual, so in this case it would be providing someone younger than pension age an income sufficient for them to live with dignity, and survive to pension age. It is irrelevant that as a universal benefit their families would also be receiving the support on an individual basis.

RE: political views of pensioners. The point made by the speaker was that pensioners vote for the status quo, because those who do not benefit from the status quo die before they become pensioners. This is relevant to my article because I was at the conference, it was referring to health inequalities, and health inequality is something that I am passionate about combating via a basic income.

And as for 'no politicians are interested' the basic income is in the Green Party manifesto and has been for ages, the proposed pilot scheme is labour-led in Glasgow, and cross-party led in Fife (including conservative) and the SNP government has committed funds to pay for research into what a basic income pilot would look like. On Tuesday I hosted an event in the parliament with labour and snp politicians attended by anti-poverty groups, trade unions, and human rights organisations. So I am happy to be able to tell you that there is political will, but as in all things we will need to win popular support, which does not happen overnight.

Kind regards,

Ben

Radish

Fri, 11/10/2017 - 12:21

Here is a link to the website mentioned in the article: Citizen's Basic Income Network Scotland (CBINS)

@MauriceBishop,

You are being disingenuous at best, outright lying at worst. During the referendum period the UK government did acknowledge that they would continue to pay pensions into an independent Scotland - that was outright stated. Here is a BBC article on that subject (there is of course much anti-independence bias in the article but let that stand):
Scottish independence: Pensions 'secure' post-Yes, says UK minister

Also you don't mention that UK citizens living abroad already get their pensions paid to them though only at the rate the pension was payable at the time they initially left the UK and went abroad. (Increases to pensions after that would not be paid to them while they were domiciled abroad.) So the precedent is already there, as is done now for any pensioners living abroad.

In all, take your nasty, lying scaremongering elsewhere.

DaveS

Fri, 11/10/2017 - 16:43

@Radish,

I agree. Pensions in payment by the UK government will continue post independence. I take your point about overseas indexation (or the lack of), but would point out that where reciprocal arrangements between countries exist then indexation does continue. Clearly it would be advantageous for pensioners (if less so for government finances) if such an agreement was made between iScotland and rUK.

From independence day Scotland becomes responsible for pension rights accrued in iScotland while rUK remains responsible for pension rights accrued in UK. So an individual drawing state pension a year after independence would receive a small pension from the Scottish government and a much larger one from rUK. Obviously, with the passage of time, this ratio would reduce, then reverse, until all those with UK entitlement were drawing pension.

A potential problem (which could be addressed by agreeing appropriate rules) is that entitlement to pension is based on a minimum number of years of NI contribution, and it would be unfortunate (to put it mildly) if an individual, while having sufficient years in total, was denied pension by either (or even both) governments because of insufficient years in either.

geacher

Fri, 11/10/2017 - 17:44

@Radish, @Dave S. The notion that rUK will pay pensions to foreign pensioners is a stupid thought.......of course they won't. Radish is getting confused between *eligibility* and *liability*. The Steve Webb is correct when he says that "Older people would be entitled to current levels of state pension in an independent Scotland" Yes they still would be, that is not the issue here, the issue is who pays, and in an iScotland, it would be ScotGov. ScotGov released a report in November(?) 2013 penned by Ms Sturgeon which quite clearly states that this is the case.
To cite UK pensioner staying in Spain (for example) as being currently in receipt of a UK pension is proof that rUK would pay pensions to Scots pensioners in a iScotland is disingenuous. These people are STILL UK citizens, regardless. That this myth is still peddled by nationalists just goes to show the level of denial or lack of knowledge that they have.
"In all, take your nasty, lying scaremongering elsewhere"? I think that Radish owes Mr Bishop an apology.

MauriceBishop

Fri, 11/10/2017 - 21:36

@Radish.

No, the UK never said that after independence it would pay pensions to citizens of the new Scottish state.

Read the third paragraph of your own "proof": "However, he said there were still questions over which government would pay the money."

You go on to say: "Also you don't mention that UK citizens living abroad already get their pensions paid to them." Well, yes. Because they are still UK citizens. Not citizens of a different country.

The person being nasty and telling lies here is you. Separatists always get very angry when people present them with inconvenient facts.

MauriceBishop

Fri, 11/10/2017 - 21:40

@geacher
Thank you. But it will never happen. Pensions is one of those areas that is crippling to the independence argument, and therefore the supporters of independence are always hostile about it.

MauriceBishop

Fri, 11/10/2017 - 21:55

@bensimm86: "pensioners vote for the status quo, because those who do not benefit from the status quo die before they become pensioners."

This is simply nonsense. Pensioners vote for the option that is least likely to see them living out their final days eating cat food because the government of the day betrayed them. 3/4s of Scotland's pensioners voted "No" in 2014 because the independence campaign presented addressed their concerns as inconveniences to be countered with hostility and lies, like the responses of Radish and DaveS above.

Thy-Robocop

Sat, 11/11/2017 - 11:51

@geacher: Hold on a second... are you saying that those residing in Scotland on the day of Scottish independence, who up until then are British citizens, would be stripped of their British citizenship upon becoming iScotland citizens?

How does that work? The laws on British citizenship say that British citizens do not automatically lose citizenship if they acquire any different nationality. The UK government would have to pass or amend the law specifically to introduce that restriction for iScottish people, and I doubt such a proposal would go down well among the general public and internationally.

Besides, stripping iScottish citizens of British citizenship status wouldn’t solve the problem of rUK being liable for pensions. The only requirement needed to claim a British pension is to have worked in the UK and payed National Insurance contributions (as stated here https://www.gov.uk/state-pension/eligibility ). And you don’t need to be British to be able to pay National Insurance, you just need a valid NI number, which anyone who works in the UK can get. For example: my dad, an Italian citizen, worked in the UK for a couple of years and payed NI contributions for that time, and now that he’s retired, he gets a British pension on top of his Italian one (albeit not the full British pension because he did not contribute for 30 years to it, obviously). The people residing in Scotland up until Independence Day will have paid NI contributions to the UK till then, so there’s no question that they wouldn’t be entitled to British pension, and that the UK would be liable for it, for as long as they live. iScotland would then be liable to pay pensions to those working in Scotland and paying NI contributions from Independence Day onwards (if that’s the way they decide people can claim for a Scottish pension), or for this Basic Income Guaranteed initiative if ScotGov decides to implement that.

So unless you can factually prove that rUK will put in provisions/laws to cease paying all pensions to those iScotland citizens who have paid NI contributions to UK up until Independence Day, and thus have rightful claim to a British pension, then I guess it is you who owes Radish an apology.

MauriceBishop

Sat, 11/11/2017 - 13:43

@Thy-Robocop

"The UK government would have to pass or amend the law specifically to introduce that restriction for iScottish people, and I doubt such a proposal would go down well among the general public and internationally."

Then you haven't been paying attention.

"so there’s no question that they wouldn’t be entitled to British pension, and that the UK would be liable for it, for as long as they live"

Repeat it as often as you want, it doesn't make it true.

Quoting the White Paper:
"Under our plans your state pension and any personal or occupational pensions will be paid in the same way as they are today. The rights you have accrued will be protected. Scotland is better able to afford pension and welfare payments than the rest of the UK. Social protection (which includes pensions and benefits) takes up a smaller share of our national output and our tax revenues than it does in the UK as a whole.Under the Scottish Government’s proposals you will, asa minimum, receive the same state pension payments on independence as in the rest of the UK."

Plain as day, it is saying that Scotland will be paying, not the rUK. In independent Scotland, the UK pension ends and is replaced by one provided by the Scottish Government.

As for dual nationality - Westminster could end that policy at any time. And I have little doubt that AFTER a referendum victory but BEFORE the divorce negotiations started, that is exactly what it would do.

"So unless you can factually prove that rUK will put in provisions/laws to cease paying all pensions to those iScotland citizens who have paid NI contributions to UK up until Independence Day, and thus have rightful claim to a British pension, then I guess it is you who owes Radish an apology."

Firstly, you subscribe to the fallacy that people who pay in are establishing an 'account' they draw upon latter. That isn't how pensions work.

Secondly, Alex Salmond had the civil service issue a position paper in 2013 that puts the matter beyond doubt:
"For those people living in Scotland in receipt of the UK State Pension at the
time of independence, the responsibility for the payment of that pension will
transfer to the Scottish Government. For people of working age, living and working in Scotland at the time of independence, the UK pension entitlement they have accrued prior to independence will become their Scottish State Pension entitlement. Any pension entitlement accrued in Scotland after independence will also form part of that
Scottish State Pension. On retirement, the Scottish State Pension will be paid by the
Scottish Government."
http://www.gov.scot/resource/0043/00434502.pdf

And, for the sake of completeness, here is the position of the DWP:
"In the event of independence, State Pensions and benefits in Scotland for its citizens would be the responsibility of a Scottish Government. Therefore, any questions about entitlements in an independent Scottish state should be directed to the Scottish Government."
https://www.whatdotheyknow.com/request/385087/response/947100/attach/3/F...

Thy-Robocop

Sat, 11/11/2017 - 13:54

There’s also this implicit assumption from some of the comments I’ve read that if the UK does decide to dump all liabilities for Scottish pensions (and other things) to iScotland on Independence Day as part of the negotiated agreement for separation, then Scotland would not be able to afford to pay for pensions (and everything else) without crippling levels of austerity to balance the budget.

This assumption seems to persist despite the growing body of evidence that austerity doesn’t work to reduce the deficit, despite economists saying that deficit spending in an economic recession is better option to stimulate growth, despite increasing support from organizations and political parties to stop austerity and invest more (even Tory MP Nick Boles has started arguing for it, as I’ve read yesterday. And since his party is the one enacting austerity, he should know that we “there is no magic money making tree” and that “we don’t have enough money to afford X”. So why is he proposing to stop balancing the budget and start investing anyway?) and despite evidence that countries who reverse austerity policies and invest in their the country end up growing their economy faster and reduce the deficit earlier than continuing to pursue austerity (See Portugal’s economic recovery, after years of austerity policy: https://www.theguardian.com/commentisfree/2017/aug/24/austerity-lie-deep.... Note that Portugal has the handicap of being in the Eurozone, with little to no control of it’s monetary policy, yet still managed to fix its economy with anti-austerity policy regardless).

Given the above factors, and given that the SNP have consistently been proposing anti-austerity policies and increased investment in the economy via deficit spending, isn’t it far more likely that ScotGov’s response (assuming it’s lead by the SNP) to the statement “You can’t afford X, you don’t have the money for it” will be “lol, we’re going to do it anyway, look at how fast our economy grows now that we’ve done it”?

Though I guess the SNP, and the Yes movement in general, would need to educate the rest of the population on Modern Monetary Theory (https://en.m.wikipedia.org/wiki/Modern_Monetary_Theory ) to convince them of the benefit of this approach, given the ingrained assumption that government spending works like household spending that underpins these “Scotland won’t be able to afford it” comments. Fortunately, there’s a very easy way to explain Modern Monetary Theory to get the point across. You just focus on the part of it that says that taxed money gets DESTROYED rather than stored in the Treasury’s vaults, and that the “magic money-making tree” of government spending is necessary to create money to put back in the system. (For a more detailed example on how MMT works, see this easy to understand blog post http://www.progressivepulse.org/economics/is-world-leading-nhs-healthcar...)

MauriceBishop

Sat, 11/11/2017 - 14:22

"This assumption seems to persist despite the growing body of evidence that austerity doesn’t work to reduce the deficit,"

That is irrelevant. The people of Greece know it to be true, but nevertheless their government finds that their circumstances don't allow for any other policy.

For a country that needs billions but cannot borrow them, there is no choice but to squeeze their citizens.

geacher

Sat, 11/11/2017 - 16:27

@ Robocop. There is some seriously perverse logic going on here. You say "UK does decide to dump all liabilities for Scottish pensions (and other things) to iScotland on Independence ..." UK is dumping nothing. If independence happens then it would be because Scotland is leaving the UK, and if we leave....we don't get to keep the bits we like, like pensions, we walk away from everything, good and bad.
"then Scotland would not be able to afford to pay for pensions (and everything else) without crippling levels of austerity to balance the budget. " Exactly. You have just nailed the pro union stance on pensions.

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