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Pensions Report in later life

October 2004 

 

PENSIONS REPORT: LATERLIFE SUMS UP

The publication of the first part of the Pensions Commission report by Adair Turner has received wide comment from the media. And so it should: our future prosperity is at stake.
As has been known for some time, we have a looming problem: an ageing population, state pension in decline, too few people saving for their old age. And the recent failures of various private pension schemes have offered even less reason to save.
The predictions are not good. Without some kind of pension reform, many people will be living in poverty in later life. With 12 million people not saving enough for their retirement, we could be seeing this happen in about ten years time, and almost certainly in twenty years time.

The new report advocates that we:

• Take later retirement
• Pay higher taxes
• Put more money into private pensions

 

Means testing is confusing and inefficient:

The report criticised the complexity of means testing for pensioners. Many MPs want to abolish this. But there’s an argument that means testing actually helps the poorest pensioners, ensuring that they receive more money than the better-off. If your thinking tends to the ‘undeserving poor’ viewpoint, you could object to this. But many poor pensioners are women or those on wages too low for them to save. If, as the report hints, it might call for compulsory saving in the final part of the report, due next year, then surely there must be some kind of means testing for this.

What the unions want:

Compulsory contributions from employers, the link between earnings and the state pension to be restored, employees to pay into schemes at about half the rate of employers. And a rise in state pensions.

How do other countries manage the pension issue?

In Australia, a country that reformed its pension policy twelve years ago, there are compulsory employer contributions, tax incentives for employees who join company schemes, tax concessions for the self-employed to encourage them to join schemes too. In the US, there are major tax incentives to save for pensions, higher earners supporting lower earners, but very very few of the social services that we have in the UK.

Help the Aged is severely critical of the Government:

A statement from Help the Aged reads: ‘The interim report of the Pensions Commission is a damning critique of how we have all put pensions on the back burner, and tells a worrying tale of the likely consequences of this neglect .
‘Governments, employers and individuals have all neglected pensions and sought to pin the responsibility on others. But all will have to take action if the problems identified by Adair Turner's team are to be addressed…The alternative is a growing population of unhappy pensioners surviving at subsistence levels, complaining about their dashed expectations of retirement, and sustained by an escalating bill for means-tested benefits.’
 

 

 

laterlife interest

The above article is part of the features section of laterlife.com called laterlife interest. laterlife interest contains a variety of articles of interest for visitors to laterlife.com written by a number of experienced and new journalists.

It includes both one off articles and also regular columns of a more specialist nature such as healthwise, reports from the REACH files, and a beauty section called looking good in later life.

Also don't forget to take a look at our regular IT question and answer section called YoucandoIT by IT trainer and author Jackie Sherman.

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