Welcome
I’ve started this blog because I think it’s important to create a consensus around the future of pensions policy.
When people save in a pension, they’re putting their money away for decades. They’ll find decisions about saving easier, if the politicians can create a stable system. That’s why we want to create a consensus – not for its own sake, but because it will help people save.
If the main parties can agree on a broad framework for the future of pensions policy, that will take some of the political risk out of saving.
Just like Bank of England independence has made it easier for companies to invest, so a consensus on pensions would make it easier for workers to save.
I’ve been encouraged by the initial response from the main political parties to the White Paper – and we’re going to continue to work closely with them over the next few months.
But we don’t want this to be a consensus that is based on wishful thinking, where we want to agree so much that we sweep any concerns under the carpet.
For this consensus to last, it needs to be built on a solid foundation – and that means engaging with those concerns openly and fully. If we can reassure people about the foundations of the policy, or the assumptions behind it, then we can create agreement which will be more likely to last. And if there are areas where those concerns are well-founded, then it’s better to find out now and alter our proposals than to discover we were wrong after the fact.
That’s what this consultation website is all about. It’s here to give you a chance to raise questions, concerns, ideas.
Some of our proposals are still in development – in particular, our reforms to private pensions. Our plan here is to introduce a new form of saving – where we will automatically enrol employees into a pension, and require their employer to contribute. The details of this proposal are still under construction and on Monday, we kick-started the consultation on this.
Our proposals on state pensions are more definite. The White Paper made clear that we planned to link the Basic State Pension to earnings, increase its coverage so as to recognise caring contributions better, and raise the State Pension Age as we live longer.
But there’s still debate around the assumptions behind our policies and how they would work in practice. On Thursday, the Pensions Policy Institute are launching their report on our recent White Paper, and the three main political parties will be there commenting on their views.
But crucially, this is your chance to put your concerns direct to a Government Minister, share your ideas and contribute to a lasting solution.
If the emails I received this week are anything to go by we’ll be discussing pensions in relation to young people, women, and the self-employed.
One person has proposed ideas about making pensions more sustainable, another has something to say on the effects of index linking the state pension and a different individual puts forward the idea of having a single pension throughout life.
Some of the most pressing issues raised by you will be explored in greater detail in our online Talking point debates.
In the meantime, I’m looking forward to hearing what you have to say.
RSS 2.0 feed for these comments.
This entry was posted on Thursday, July 20th, 2006 at 10:41 AM by James Purnell and categorized in General posts.
Roderick Eaton wrote:
The outline proposals I have seen appear to make good sense. However, with this new and apparently radical proposal, would it not be logical to reinstate the legislation that gave company pension fund investments exemption from tax? Many companies have already required their employees to pay for a company pension as part for their terms and conditions of service. Many such funds, well supported by employers and employees contributions, have already avoided the poverty trap of old age for their workers yet the funds investments suffer a tax penalty. Haven’t these employer/employee schemes/funds significantly reduced the size of the current problem with pensions and should their investments not therefore be exempt from the punitive tax system?
Posted on 20-Jul-06 at 4:22 pm | Permalink
Stephen Burke wrote:
In relation to the state pension, it is not clear to me what the real purpose of it is supposed to be. I can think of several possibilities, but none of them seem to match the way the current system works:
1) A safety net to prevent old people living in poverty? No, because you only get it if you’ve made NI contributions, and also because the MIG is higher anyway.
2) A compulsory contributory pension similar to a personal pension? No, because the eventual pension is not related in any real way to the value of the contributions you make; if NI contributions were voluntary, as indeed they can be in some circumstances, it’s essentially impossible to decide if they represent good value.
3) A flat-rate universal benefit to all retired people (or to all people over a specified age)? Not really, because the pension depends on the number of years of contributions, although not the amount paid.
So, what is the principle goal/purpose of the state pension, both in terms of who receives it and what the amount is, and how does the proposed system seek to achieve it?
Posted on 20-Jul-06 at 4:23 pm | Permalink
Stephen Griffiths wrote:
I think that once again this Pension reform is way off target and that the people putting together this information should get amongst the real population. Assuming that this country cannot afford pensions but can afford to generously donate several billion pounds of our money around the world:
1) There should be a maximum income before participation rather than minimum to really help the lower paid. This will prevent the higher paid from participating,which they do in all other schemes.
2) Investments should not be “at risk” but utilise safe bank building society accounts. The gross amount saved by all participants should demand a higher than normal interest rate.
3) Should be opt in rather than opt out to test whether people really think it is such a good deal.
4) Has anyone considered that some people do not save because there is nothing to save?
5) All in all, a very shoddy looking arrangement put together by supposed experts.
Posted on 20-Jul-06 at 6:45 pm | Permalink
Ian French wrote:
Pensions/annuities pay out what is really a high interest on capitol(accumulation of pension)A capitol of £10,000 may pay out £700 per annum.Why not pay a smaller amount to retain the capitol and then allow the capitol to be part of inheritance and allow parents to will their capitol to their childrens pensionscheme free of the inheritance tax system.Within a few generations the pension system would self support maybe even requiring capping.Insufficient space to expand but hope an inheratancesystem into pensionschemes would be more use than cash for luxury items.
Posted on 20-Jul-06 at 9:24 pm | Permalink
David Cull wrote:
Successive Governments have told us (since the Maxwell affair) that our pensions were safe and guaranteed - the company that I worked for (for 38 years)went bust and I lost something like half of my pension. When can we expect you to put right this injustice ?
Posted on 21-Jul-06 at 9:51 am | Permalink
Brian Jones wrote:
Since the employer has to contribute this will raise the cost of employment. The end result of this will be an increase in unemployment. Surely not an intended result.
Posted on 21-Jul-06 at 12:22 pm | Permalink
Janet Lowe wrote:
Dear James,
Although I agree that something has to be done to provide our growing number of pensioners with an adequate pension, I disagree with the plan to raise pensioner age entitlement. Surely their should be some flexibility!
My husband, like most of his colleages started to suffer health problems in his fifties, through stress and overwork. By the time he was 61 he had to take early retirement but although he had paid all his neccessary contributions he couldn’t receive any state pension, not even a reduced sum.
We are managing but no thanks to the pension service, who, he feels have let him down completely, after 46 years in the building industry!
I suppose he is lucky, at least he is having a retirement, while the majority of his former colleages, didnt live to draw their pension! Please make the age of entitlement more flexible!
Regards Janet Lowe
PS surely if you start work early, you should be able to retire early and visa versa.
Posted on 22-Jul-06 at 6:22 am | Permalink
Neil Muir wrote:
I noticed that one important reform to the British Pension system was conspicuous by it’s absence. Thousands of British Pensioners become poorer each year because their pensions are locked and do not increase each year, purely based on which country they are living in. Canada is one of those countries but the USA based pensioners just to the South of us receive regular increases. This is discriminatory and just plain unfair. I challenge you to publish a meaningful answer on your blog.
Posted on 22-Jul-06 at 7:02 pm | Permalink
David McKeever wrote:
3 points
Young people are asking, and they need an answer.. why should they save and sacrifice for a pension when others who don’t will probably have a similar standard of living throught the state benefits system. These benefits are equal to a pension pot of circa £80k
Why do the well off in society receive greater pension tax benefits/subsidy than the less well off /lower wage earners???
Why are pensioners virtually forced to place their hard earned savings into the biggest ever financial ‘rip off’ called annutities. The use of pension pot should be determined by the pensioner.. and include alternatives such as Building Society or NSA Bonds, where the returns are as good as if not better than the insurance companies, and where the the capital is not handed to the insurance companies, on death, but could be gifted to other family members to help them buy their own homes ( first time buyers) or to build their pension pots?
Posted on 22-Jul-06 at 8:15 pm | Permalink
Brian Jones wrote:
Thanks for your reply to 5 above.Since the goverment is a large employer it will have to find an extra 3% like other employers. Will this come from extra taxation or do you intend to increase M4 money above the current 13.7% which is approx the inflation rate.Or is there another way.
Posted on 24-Jul-06 at 1:15 pm | Permalink
Barbara Walton wrote:
The White Paper does not relate to pensioners like myself in the 65 and over bracket, what we urgently need is a bigger increase in our weekly pension so that this winter we can use the central heating and also afford to eat properly, which at present we have to choose between keeping warm or eating, and please do not state that the £200 heating allowance will now cover the massive increase in gas & electricity also at 65 the TV licence should be free, since we have paid all out working lives for it.
Posted on 24-Jul-06 at 6:41 pm | Permalink
Lesley wrote:
I agree, in principle, with the element of compulsion in the system. Some people who could afford to save will always find things (holidays, going out) that they would rather spend their money on! However I think that in order for people to take this seriously it needs some guarantees. For example, I’m only 37 but in my working life-time my expected retirement age has gone up from 60 to around 67. If people feel that the system can be changed at will (which when government is responsible, it can) then they are less likely to view it as a solid investment/savings vehicle.
Posted on 25-Jul-06 at 7:55 am | Permalink
Karen Fletcher wrote:
Research has shown that universal benefits are more effecient when it comes to ensuring that the most needy claim their entitlement. So ideally the best course would be to raise the basic state pension to provide a reasonable income.
Tax relief on pension contributions distorts the investment market, mainly benefits the rich and does little to encourage saving among the poor. In 2004 tax relief for pension contributions cost £19 billion. This amount would pay for an increase of 46% on the basic pension (figures obtained from DWP web site). There would be no need for means tested pension so the money saved here could provide a further boost to the basic pension.
People may decide that a pension scheme is not the right vehicle for providing an income in retirement, prefering instead to have access to the capital. This may be helpful in pursuading people to save for retirement. It would address the points raised by Ian French and facilitate a redistribution of wealth downwards.
The idea would be fiercly resisted by the city and criticised in the press but the issue is far too important to allow such vested interests to hold undue sway.
Posted on 25-Jul-06 at 10:34 am | Permalink
Lisa Tarafdar wrote:
The White Paper left a lot hanging in terms of the way in which Government sees the operation of personal accounts working. When can we expect to see more detail on this critical aspect of reform and what is the process through which the Government will arrive at final decisions in this area?
Posted on 25-Jul-06 at 3:38 pm | Permalink
DAVID ALLEN wrote:
In your reply to Stephen Burke you state that a full contribution record would provide £135 a week. Yet maximum basic state pension is only £84.25. How is this figure arrived at?
Posted on 25-Jul-06 at 4:57 pm | Permalink
Michael Graham wrote:
In my view the whole pensions debate is confusing. Having said that I would congratulate the Minister and others involved in raising the profile of the debate - confusing info at least gets the message across that everyone needs to think ahead for their pension. The big problem remains what do we do! But at least we know we need to do something!
I have some suggestions:
A) - About Messages for Savings
It would be very helpful to have a set of simple messages which clearly explain why and to what extent it is worthwhile saving for a pension. After compulsory deductions through payroll, people on low incomes are probably (in my view) better off not saving for a ‘pension’ - they would be much better off saving via ISA’s if indeed they have any cash spare for saving.
Could you please suggest three simple ’saving for your old age’ (i.e. not saving for a pension) messages for the following categories of people:
1) - a young person likely to work at or close to the minimum wage most of their lives
2) - a young person likely to be in irregular employment or not employed most of their lives
3) - a young person with prospects of earning the ‘average wage’ most of their lives - a) living in rented social housing and b) living in owner occupied housing
4) - a young person with prospects of earning ‘above average wage’ most of their lives
B) - About eliminating the stigma of claiming means tested benefits
I wonder if some clear statements need to be made so that it is clear to all that today’s ‘payment in’ to the system via tax NI vat etc pays today’s ‘benefits out’ (from UK and EU) and so that it is clear that it is beneficial to the economy for people to claim every benefit to which they are entitled. If those pensioners who do not claim all they were entitled to understood that they were actually doing more harm than good perhaps more would be spurred to make a claim.
C) - About understanding the merits of different ways of saving
The idea that the state pension involves us all contributing to a big pot in which we have a share is misleading in my view. If someone wants their own ‘pot’ then ISA’s seem a better way of saving to me.
Could the Minister try to give some simple messages which explain the relative merits of ISA’s and Pensions for those on low to average income.
Close
Hope the debate runs well and brings lots of good ideas for you. Thank you for considering my points.
Posted on 26-Jul-06 at 11:03 am | Permalink
LAURIE wrote:
The government’s proposals on the State Pension (SP) make good sense, although I think it regrettable, to put it mildly, that some form of retrospection can’t be applied to improve the SP prospects for carers, marries women etc..
On another point, the government is wrong to pay out Winter Fuel payments and issue free TV licences to people once they reach a certain age. Winter Fuel Payments should be means tested, and if you accept the argument that there should be a TV licensing system (which I don’t), and that a TV is a basic necessity (which I also don’t), then a TV licence benefit (also means tested) is the only logical conclusion.
Perhaps Pension Credit should be adapted to include Winter Fuel and TV licence costs within the calculus. This would ensure provision “to each according to their needs”
Posted on 26-Jul-06 at 3:23 pm | Permalink
Peter Johnson wrote:
Is it not a fallacy to say that the minimum pension age for claiming the state pension in the U.K is sixty-five, when any single person or couple can decide ‘not’ to work from the age of sixty and put in a claim for pension credit, thereby recieving a guaranteed higher amount than they would with the basic state pension and receiving it from an earlier age. Has the issue of pensioner inequality in income really been addressed if somebody who has worked for forty-four years without making private pension provision can only get £84.00 a week from the state pension from 65(unless they top it up with pension credit); while somebody who has never worked can get £111 a week on pension credit from the age of 60(which is also an effective acknowledgement from the government that the government state pension is not enough) Also, if there are more people in work than ever before with the capacity for an unlimited workforce through immigration and average life-expectancy for a male is still only 76 and for a female 81, why is there a pension crisis at all?
Posted on 26-Jul-06 at 4:42 pm | Permalink
DAVE PRESBURY wrote:
The proposed new system still provides no incentive for low to middle earners to save for retirement, the amount you can save is so minimal in relation to providing an income (how many people can even over a lifetime afford to save even 25k)that it is negated by the loss in other benefits. You state that someone working and obtaining a full pension (40 years)would get £135.00 and the MIG only provides £114.00 but you convieniently forgot to mention that people on the MIG also receive substancial help with both the Council Tax and if renting with Housing Benefit. This can be the equivelent of another £150 a month, you need to have savings of at least 40k to achieve this and even then you are still only in the same situation of someone who never saved at all
If you are going to have a system that encourages people on low to mid incomes to save extra for retirement you need to ensure that by doing so that they are substancially better off than people who do not bother to save.Without this incentive you are never in a million years going to persuade me or people like me to give up my annual holiday (this is the only way on my income I could save an extra 1k year)on the off chance I will live to 70 and then might be £50 a week better off.
Posted on 27-Jul-06 at 9:22 am | Permalink
m.campbell wrote:
Having suggested a version of NPSS to Govt in your first pensions consultation in 1997, I naturally think it an excellent idea. However, the poorest will never be able to afford to contribute without help. While tax and NI rates should NOT be raised for high earners, the £billions per annum being channelled to them in pensions tax relief is iniquitous and should be redirected to subsidise low earners/carers NPSS contributions.
Posted on 27-Jul-06 at 10:45 am | Permalink
Jason Thackray wrote:
The government has told us too many people are retiring early and not saving enough for retirement. So why then is the requisite number of qualifying years needed to for the full 100% Basic State pension being reduced from 44 years to 30? Surely this is encouraging people to retire earlier or cut down to part time work. This all has the affect of reducing the amount of money being paid into the “pot” and reduces how far you can stretch the funds.
I am reluctant to accept the argument that reducing the number of requisite years of contributions will benefit women and carers as that thinking shows a fundamental lack of understanding of the provisions that currently exist for these groups of people. For example the proposal to scrap HRP is going to cost the country more and will probably reduce mothers willingness to work. This is because under HRP you get 6 years worth of NI credits then your requisite years are reduced from 44/39 years until you no longer claim child benefit. This means a woman would not qualify for a pension in their own right if they only brought up kids their entire working life, where there is rarely extenuating circumstances why they cannot take on a part time job after, lets say, the child/children are around 12 years of age.
The new proposal is I believe to give credits for the first 12 years of childcare, which means a mother would never have to be economically active to qualify for a Basic State Pension. This means you have less money to spread among the growing elderly population if they do not make themselves economically active, and one more person the future generations will be burdened with supporting in the future.
Even if the woman was to wait until their child became to old for her to continue claiming Child Benefit and then got a job until retirement she would still retire on the full 100% Basic State Pension, assuming only that she worked before having the children and that the HRP did not account for more that 50% of her maximum number of requisite years (currently 19 years). So you can currently claim HRP for 19 years and get the 6 years of NI credits, accounting for 25 years worth of cover on their NI records, then if the only work about 20 hours a week, even at minimum wage, for the remaining 15 years of their working life, they still qualify for the 100% Basic pension!
The reason why many mothers to date do not qualify for the minimum 25% Basic State Pension in their own right is because they do not go out to work for only ONE year before or after they are no longer entitled to claim HRP, when they already have a minimum of 6 years of NI credits (assuming they have a minimum of one child) and their requisite years have been reduced from 39 to 28 (a further 11 years of HRP after the child is over 6 until it is 18).
Thus since any woman who gave birth and brought up 1 child since after the introduction of HRP in 1978 who has no entitlement to a Basic State Pension is a result of social outlooks and not because they are disadvantaged.
I put it to you that mothers are not disadvantaged when it comes to the Basic State Pension (but may be with regards to additional pension due to potential lower salaries from the career sacrifices due to child care) as they often have to work for only 1 year to qualify for the minimum Basic State Pension, and work 15 years to get the full 100%! In contrast for a man (for instance) who had no entitlement to HRP, would have to work for a minimum of 11 years to be entitled to something, and work a minimum of 39 years to get the 100% Basic State Pension.
Posted on 27-Jul-06 at 5:29 pm | Permalink
David Lewis wrote:
Before you can get credibility for any proposals for pension reform you have to deal with the present realities. I have contributed to a company scheme for most of my life. It has now gone into the PPF and as a result I have lost a large and increasing part of my savings. You may not accept that the government guaranteed thios but you must accept that it encouraged me to contract out and the chaneges in tax rules caused much of the problem. Having seen this happen to me my two sons are not interested in pension savings, reformed or not. There is no credibility now. You need to put right what is wrong now before reforming the future.
Posted on 27-Jul-06 at 7:41 pm | Permalink
C Denvir wrote:
You and your Government are guilty of acting in a most disgraceful and unethical manner by the way you have dismissed the Parliamentary Ombudsman’s report into maladministration of Private Pension collapses. To keep repeating your well worn idiotic Mantra that the government dont see they are at fault and that you have every sympathy for people whos private pensions were stolen by this Labour Govt, is just pathetic. You were found guilty and must correct this mistake, just speak to Dr Ros Altman she has a grasp of what went wrong and how to correct with minimum cost to the exchequer, because obviously successive pension ministers and the DWP havent an idea what they are at. The Fas is just an expensive farce costing more to run than what it pays out.
You say the taxpayer shouldnt have to pay for this Pension robbery, so who do you think pays your goldplated pension which has a shortfall, Taxpayers like me who have had their deferred pensions stolen by Govt will now have to pay more taxes to top up yours and local government pension holes and get nothing back in return. So Mr Purnell where is the fairness in this the government has screwed us right left and centre. You cannot restore faith in pensions till you accept the PO,s report and rectify this huge injustice
Posted on 28-Jul-06 at 1:42 pm | Permalink
John Henderson wrote:
How can anyone have confidence in the DWP providing “Security in retirement..” following its rejection of the Parliamentary Ombudsman’s findings of maladministration? Incidentally why is there no mention of that report or link to it on the DWP website?
Posted on 28-Jul-06 at 2:59 pm | Permalink
John Hunt wrote:
Mr Purnell, I refer to Ev 438 of the recent Work and Pensions Committee Report.
In a survey 26th June to 3rd July, following the publication of the White Paper on Pensions Reform and in conjunction with the W&P select CommitteeBBC “Call you and yours” programme conducted a phone in programme inviting listeners to air their views on Pensions Reform.
“25% of respondents said that they were unable to trust pension companies or governemnt advice to invest in pensions”
A further 10% said that “there was no incentive to invest in pensions”.
Given that the whole intention of pensions reform was to encourage pension saving for old age outside the state pension system, does Mr Purnell not aggree that the White Paper has failed to engender this, which is hardly surprising whilst government fails to resolve the problem of some 85,000 members of DB schemes in wind up, including both solvent and insolvent companies.
Until this matter is resolved in accordance with the Parliamentary Ombudsman’s ,her findings, and recommendations in full, then how can Government expect to have any chance of encouraging future pension savings.
Why does the Minister for Pensions Reform not take notice of the hard facts.
John Hunt
Posted on 28-Jul-06 at 7:09 pm | Permalink
Mrs Linda Gristock wrote:
I have just started receiving my pension of £26 in my own right increased to £50.50 because my husband does not have full years qualifing pension. I read the reforms and cant see anything for us. I have 13 years HRP with child care and looking after my mother and mother-in- law. Only 9 years full qualify years and lots of bits inbetween. I was born in 1946 and turned 60 this year. I am one of thousands who stayed home and looked after my children (not that there was much alternative if you did not live close to your parents! ) My husband built up serps but in 2000 I was informed I would not inherit one hundred per cent any more! My first child born in 1971 and second in 1974 before HRP was introduced so I lost some years there! Now I see that I have been left out and will not see my HRP converted to qualify years to increase my pension against 30 years but will stay at the old rate! Please tell me I am wrong I have compared my situation with someone born in 1950 who will retire in 2010 at sixty years and one month and will receive all of the transitional credits to increase her pension who might have exactly the same credits as I. How can the government expect me to receive less ? surely this would be illegal to move the goal post for one and not the other. Perhaps the European courts will reject this just as they did with the men who did not receive free perscriptions etc. A two tier system of those who will have and have not. I shall make my views known at the ballot box and urge others to do likewise! Linda Gristock
Posted on 28-Jul-06 at 9:12 pm | Permalink
Roger Stanley wrote:
Dear Minister
The service I have recived from the DWP is excellent. My concern and that of many similar people is: we paid full contributions whilst working in England for however many years before migrating.
In Australia, Canada and South Africa, our pensions are frozen at the amount to which we are entitled and do NOT receive CPI increases. The anomoly is that: if we had migrated to USA, Germany, Japan, Lebanon or Israel, or many other countries, our pensions would attract yearly increases to keep up with the CPI. Would you PLEASE take steps to rectify this inequity.
Regards
Roger Stanley. Melbourne. Oz.
Posted on 30-Jul-06 at 1:23 am | Permalink
Pauline Beech wrote:
I am a British Citizen now living in Australia. I will receive my UK pension at age 60 but it will be frozen. This means that I will not receive any indexation so my pension will remain the same each year. Britain indexes pension for British ex-patriots living in the USA, EU, Israel and over 20 other countries but not those in Australia, Canada, South Africa & New Zealand. This situation is extremely unfair and needs to be included in the pension reforms.
By living overseas, ex-patriots living in frozen countries save the Government money but not claiming extra benefits such as pension credits, help with Council Tax Bills, Housing Benefit, Medical costs under the NHS and much more. These savings greatly exceed any annual increase in pension.
Posted on 30-Jul-06 at 10:40 pm | Permalink
Gordon Williams wrote:
I believe there are at least three reasons why young people today are reluctant to save for pensions:
1 Affordability
2 Understanding the small print
3 Distrust
1 Affordability
Many youngster enter their working lives with massive debts from their education and are then faced with enormous mortages and the costs of bringing up children. There’s very little left for pensions.
2. Understanding the small print
Even MPs are mislead by pension terminology. The words used in the pensions world never seem to mean what they appear to mean. For example:
In the 1995 Pensions Act we read that the minimum funding requirement of an occupational pension scheme is the value of the assets of the scheme which should not less than the amount of the liabilities of the scheme. The Government said ‘the MFR will mean that members can be confident that the value of their accrued rights is secure, especially in the event of the scheme or the employer company winding up. If only! The small print in fact revealed that the MFR only provided a 50:50 chance that the assets would meet the liablities as the 125,000 pensioners whose schemes which have been wound up since then well know.
And then John Tiner, Chief Executive of the Financial Services Authority, said of the FSA guide to occupational pensions “We never said that ‘guaranteed’ means ‘guaranteed in all circumstances’ “. This the language of Alice in Wonderland - “words mean what I choose them to mean”!
3. Distrust
Many pension promises have not been met in the past so there’s no reason to suppose they will be met in the future. Indeed in the latest white paper on pensions we read that the government is proposing to re-examine the provision of mandatory indexation of pensions in payment. Pensioners have planned their savings throughout their whole working lives on the assumption that their pension would be protected against inflation. If the government is able to cut our pensions at a stroke like this why should anyone have any confidence in future saving for a pension?
Posted on 01-Aug-06 at 12:02 pm | Permalink
Joe Robertson wrote:
Existing pensioners in poverty need to be assisted, even if that means that they get means tested benefits as Gordon Brown has done over his 9 years at the Treasury.
Existing workers need to save more prior to retirement so that they will not need to consider claiming means tested benefits. On page 59 of the Regulatory Impact Assessment of \”Security in Retirement\” there is a table (figure 2.VI) that says it all.
Eighty one percent of all employers make NO contributions for their employees pensions. That includes 4,100 large employers of more than 250 employees. That is the reason why stakeholder pensions never worked as well as expected and that is why you still get new 65 yesr olds who are completely dependent on the state.
The name of the new game is not Education, Education, Education - it is Compulsion, Compulsion, Compulsion. Compulsion on employees, Compulsion on employers and Compulsion on the State.
Posted on 02-Aug-06 at 10:09 am | Permalink
Philip Swailes wrote:
I am aware that demographocs have altered current views on pension provision. (however if the NI scheme origionally was covering ones own generation for pensions not the older generation of the time, there might not be this problem)Unfortunately It will always be difficult to sell to Young People the notion of providing for the distant future. In addition whatever payments companies make towards pensions forcably by the government will result in the money being regained by the employer by some other way (ie future low pay Increaces). Additionally to obtain a reasonable pension the ammount needed to pay in to any scheme will be quite large. (especially for someone in their 40s) At the end of the day the semi-privatisation of the National Insurence scheme will only lead to more confusion distrust and enevitably the poorest workers loosing out. Why not encourage employers to revert back to a final salery pension scheme. This could be done by tax incentives for the employer and employee which would aid participation.
Posted on 02-Aug-06 at 9:30 pm | Permalink
John Hunt wrote:
To be fair to all parties in the formulation of a new pensions policy, I suggest that it is grossly unfair to discriminate between those in the public and private sectors. Public sector workers as employees of government have pension savings schemes which are financially fully underwritten by Government from public funds. Private sector workers currently enjoy no such protection and under the “new pensions systeme” this situation will not improve. To be viable any new system has to provide at least legislative protection for all in both sectors and where this is failing through government maladministration then the shortfall in protection has to be underwritten financialy and remedied from public funds. Moreover to engender any public confidence this must be retrospective. Indeed the European Insolvency Directive, should it be fully observed by Government would go a long way to achieving this, but only if the specified “full compensation” for effected parties is provided. Niether FAS nor PPF currently provide sufficient remedy in terms of compliance with the European insolvancy directive or in terms of fully protecting those who have in the past made or in the foture make pensions saving. All pension schemes have to be fully secure and Trust is the vital ingredient, which is sadly lacking.
John Hunt
Posted on 10-Aug-06 at 11:31 pm | Permalink
C Denvir wrote:
Government reaction to P/ Ombudsman and PASC committee re Govt maladministration of private pensions is described as a scandal and worse than Maxwell.
You have no options other than to either put right this terrible wrong or resign
Posted on 11-Aug-06 at 1:23 pm | Permalink
Neil Muir wrote:
With respect to my earlier posting regarding some 460,000 British pensioners living in Canada/Australia/South Africa and New Zealand suffering from frozen pensions.
I did manage to locate the text you had referred me to, which basically states that the British Government cannot afford to correct this very unfair and discriminatory handling of pensioners who happen to live in a specific country abroad.
Is it not true that:
It would cost Britain less than 3/4 of one percent (£300 million/year) of the UK pensions budget to end this discriminatory practice.
and:
Fraud in the Social Security system was recently estimated by the Government to cost them as much as £7 billion every year.
Where are their priorities?
It is not acceptable to hide behind the poor decisions of earlier governments.
Posted on 11-Aug-06 at 4:59 pm | Permalink
G D Mills wrote:
As £1 per week is deducted for every £500 of savings above the limit when looking at pension credit, can you please tell me where I can invest money safely to obtain 10% interest?
Posted on 11-Aug-06 at 7:36 pm | Permalink
Dr Brian Marks wrote:
The Pensions Ombudsman mechanism (hereafter PO) is a failure for many scheme members. It works OK for individual subjective judgements, for example when trustees fail to give due weight to a medical opinion about ill-health early retirement. It fails particularly when there is a legal element to the decision. It fails because:
(a) Many scheme members find it inaccessible. They may simply give up because the prospect of contention with a big organisation is daunting. They may give up because they feel that in order to use TPAS and the PO they need facts – facts which the trustee will not give them.
(b) Mistakes by the PO on legal issues get corrected in the High Court when the mistake favoured the scheme member. When the mistake damaged the scheme member it does not get corrected because the scheme member cannot take the financial risk of High Court action.
Scheme members inevitably feel that this imbalance harms their prospects. Consider this question from a poll the PO organised, a poll of users of the PO:
Q21. The pensions Ombudsman’s role and powers have been decided by Parliament. He is completely independent and acts as an impartial adjudicator. How satisfied were you with the independence and impartiality of the office?
Despite the blatantly leading question, which tries to provide the answer before asking the question, more than twice as many were dissatisfied or very dissatisfied as were satisfied or very satisfied.
Here are two examples of the gap that arises between PO decisions and what scheme members (and possibly MPs and the Courts) regard as reasonable.
1. A trust agrees a change to the deeds which gives the company the unilateral power to transfer money that has accumulated for DB purposes and use it in place of the company contribution to a DC scheme, irrespective of the funding level of the DB activity. Members of the DB scheme see this as unreasonable; they made their contributions to the DB activity on the basis that the contributions would be used to benefit DB members like themselves. The PO saw nothing objectionable.
2. In order to recruit, retain and retire members at the company’s convenience, the company and the trust make written promises about their intentions to protect pensions in payment from some of the consequences of inflation. In fact their intention is not what they wrote, since what the company can do is controlled by “Corporate Instructions” from a foreign parent company. The PO finds the promises “not enforceable” and the scheme members think they should be.
A consequence of the PO ineffectiveness is that the PO mechanism gets ignored. Consider the “South West Trains” precedent. In that case the company, the trust, and the trade unions were all agreed on what they wanted to happen and an application to the High Court was made. The High Court decided it could happen.
Consider now another company which wants deed changes which the scheme members, the trade unions, and the trust do not want made. This company claims it can offer the members choices (all bad for them) and when the employee agrees to one of them that becomes part of the terms and conditions of employment which the trust cannot refuse to implement (whatever the deeds say). The trustees get legal advice that this is true and concede. The issue of how far the South West Trains judgement extends to provide companies with such overwhelming powers never reaches the PO or the High Court.
There is a simple solution. Parliament should give the PO the power to require a Court adjudication. He or she should be able to say “This case raises complex legal issues and their relation to the deeds of this trust is not certain, so a judge should interpret them”. The trust would bear the cost of getting an answer from a judge. This is not a radical proposal; trusts sometime choose the route of getting the interpretation they desire validated (or otherwise) by the Courts so as to get more certainty before acting. The proposal is only that the PO should be able to put them on that course.
Posted on 18-Oct-06 at 11:08 am | Permalink
John Kent wrote:
As Mr Muir states, the cost of paying ALL pensioners equally is small (400 million a year I think you say) compared to other costs. If all expatriots returned to the UK because of non increasing pensions the UK would obviously be hugely out of pocket! From your comments it would seem that you are following the same road as your predecessors. If you cannot, or will not, see the injustice in this situation, what can we assume about other matters of equal importance concerning others living in the UK? Can we trust the government? It would seem foolish to do so if the thinking is apparently so blinkered and/or muddled?!
Regards from South Africa
Posted on 21-Oct-06 at 7:58 pm | Permalink
Peter Lapinskas wrote:
Dr Marks, your suggestion is eminently sensible. For that reason, and because it would improve the position of the individual scheme member, I think it highly unlikely that this Government would implement it. After all, since Mr Purnell is blithely ignoring both the PASC and the Parliamentary Ombudsmnan (although he holds her in the *greatest* respect) he is hardly likely to welcome anything which strengthens the Pensions Ombudsman.
Posted on 02-Nov-06 at 4:11 pm | Permalink