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Pensions Bill

We think that means-testing could be significantly reduced. As I said, if we do nothing now, it will reach about 75 per cent. of pensioners by 2050. With these reforms we can get the figure down to about 30 per cent., so there would be quite a significant reduction. I am trying to make the point that the majority of people in receipt of means-tested additional financial help will be those who have saved for their retirement, so they will be given a reward for saving. There is an argument to be had about the role and extent of means-testing in any pension system. The Liberal Democrats would remove it entirely and adopt a universal citizens pension at a totally unaffordable cost of between £10 billion and £20 billion a year. I think that we can dispense with that solution as a rational contribution to the debate, but there is an argument to be had about precisely how the balance should be struck. It is right and proper that we have a system that encourages people to save and rewards those who do so, and that is what means-testing will increasingly achieve in the future.