Liberal Democrats: Why is the party running a ‘lockdown’ scheme?

Image copyright Reuters Image caption Jeremy Corbyn will address the lobby of the Commons on Thursday A new campaign group, committed to workers’ rights, has launched in response to “severe” neglect from the Liberal…

Liberal Democrats: Why is the party running a 'lockdown' scheme?

Image copyright Reuters Image caption Jeremy Corbyn will address the lobby of the Commons on Thursday

A new campaign group, committed to workers’ rights, has launched in response to “severe” neglect from the Liberal Democrats.

It follows a conference call with Jeremy Corbyn on Wednesday, during which he pledged to defend public sector workers against redundancies and privatisation.

The drive is the creation of Working People’s Alliance, co-chaired by trade unionists and activists, and organised by Unite.

A new report found public sector workers in England and Wales were also facing losses of income when they retired.

A “lockdown” benefit which exempts members from payment of national insurance will save them around £12,000 per person, according to the report by the Unite and John McDonnell’s office.

How does it work?

The “lockdown” benefit replaced public sector pension schemes for people aged 55 or younger who retire on full state pension age, or the then current state pension age, whichever is higher.

By offering this waiver, public sector employers save themselves a huge amount in national insurance payments over the remainder of the worker’s career.

Using figures from 2014/15, the new scheme’s estimated value is about £1.8bn on each £10,000 of national insurance paid.

Mr McDonnell said it was a “must-do” and promised more details would be released in future.

The benefit appears to differ from existing “enhanced longevity” arrangements to be paid by a few employers, which are more generous than conventional schemes.

The Lockdown provider, called The Solvency Regime, is required to keep details of current and future costs in special “locked” drawdown accounts in a separate legal entity to pay the cover.

A spokesman for the Department for Work and Pensions (DWP) told the BBC: “There is nothing unique or anomalous about our national insurance contributions arrangements for the public sector.

“What’s unique is the interest that workers in the public sector take in ensuring the legacy of those who have served their country is not threatened.”

The lock-down scheme has come under fire in the past from John McDonnell’s office, which raised fears that public sector workers could end up getting a big hit in the government’s planned deficit reduction programme.

The Lockdown adviser on pensions, Tom McPhail of Hargreaves Lansdown, said: “It’s important to stress that this arrangement is not guaranteed and it’s worth bearing in mind that, under a ‘normal’ retirement, workers who retire on the ‘lockdown’ scheme would lose out.”

Why has the Liberal Democrats done this?

Liberal Democrat leader Sir Vince Cable has been asked several times on BBC Radio 4’s Today programme if the scheme was designed to help the government, in the case of Liberal Democrat MPs in 2015, who he hoped would support the Conservatives at the general election.

“We were writing from the same starting point,” Sir Vince has insisted.

“We had a feeling that the Conservatives might be more open to addressing the challenges we were raising as Liberal Democrats about workers rights, and that they would have been driven by a desire to make sure that their pledge to restore the party’s own promises on public sector pensions was honoured.”

Possible gains from the new ‘Liberal Democrat lockdown’ scheme and how it affects us: Employment and Support Allowance, income support, Disability Living Allowance, Housing Benefit, Universal Credit, Child Tax Credit, Working Tax Credit, Working Tax Credit, Income Support and Income-Based Jobseeker’s Allowance workers age 56 and over who retire between 6 April 2017 and 5 April 2020

Age 25 and over who retire between 11 April 2019 and 5 April 2020 Workers retiring between 6 April 2019 and 5 April 2020 – who are aged under 26

Age 25 and over who retire between 5 April 2020 and 16 April 2020

Age 25 and over who retire between 3 April 2020 and 23 November 2020

Age 16 and over who retire between 16 April 2020 and 7 April 2020

Age 16 and over who retire between 7 April 2020 and 17 April 2020

Age under 16 who retire between 3 April 2020 and 23 November 2020

Age 16 and over who retire between 3 April 2020 and 10 April 2020

Age 16 and over who retire between 7 April 2020 and 23 November 2020

Age 16 and over who retire between 9 April 2020 and 28 April 2020

Age 16 and over who retire between 7 April 2020 and 24 November 2020

Age 16 and over who retire between 3 April 2020 and 27 April 2020

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