One of the reasons why the West has been so successful in the last two or three centuries is because of the Rule of Law. Contrary to many other places, the respect for and the enforcement of legal contracts meant that individuals and entrepreneurs could plan their future. They were able to invest wisely, and be confident that the law would back them up when they tried to enforce their contracts.
Except when the state suddenly decides otherwise, apparently. A few months ago Steve Baker MP was contacted by a constituent. She was distressed to find that the previous government had changed her entitlement to her private pensions. At the time when she had signed the additional private pension contracts she had been assured that she would be entitled to access the money upon reaching fifty. She contributed to the funds, and planned her life and career accordingly. Reaching fifty, she contacted the pension funds – who told her that she can only access the money when she reached fifty-five.
The previous government wanted to encourage people to work (and save) for longer, and changed the rules in 2004. The existing contractual rights were guaranteed… for occupational pensions only. Typically, Labour decided that existing rights of people who had been squirreling away for an additional personal pension needed no protection. Labour was quite happy to dispense with legal protection of existing rights for those who had the audacity of trying to do some extra to provide for their own old age.
A certain George Osborne, then the Shadow Chief Secretary to the Treasury, pointed this out at the time. He said:
“The Government have also said that people can keep a contractual right to retire at 50 in an occupational scheme. However, that will not apply to people with personal pensions. Some people will have paid higher contributions in order to retire at 50, but will not be able to do so, even though they have paid for the privilege, because it is not a contractual right. Is that another example of one rule for defined benefit schemes and a less generous rule for defined contribution schemes?” (SC Deb(A), 18th sitting, 17 June 2004, c 645)
Steve Baker MP has written to Danny Alexander, Chief Secretary to the Treasury, to ask him what he will do about this inequity. Will this Government bring back the respect for the Rule of Law?