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Welfare Reform on the Web (March 1999): Pensions - UK

HOW TO CREATE A COMPETITIVE MARKET IN PENSIONS

M. Littlewood
London: Institute of Economic Affairs, 1998

Report argues that the pensions system should be entirely voluntary and that all tax concessions should be abolished. Government's role would be to provide a secure financial framework for savings by controlling inflation, by ensuring a free flow of good information, by treating investment income neutrally and by establishing a simple system for resolving disputes. People who have not made provision for their retirement would have to carry on working until physically incapacitated, at which point incapacity benefit should be made available to them.

LOW PAID UNLIKELY TO FACE COMPULSION ON PENSIONS

N. Timmins
Financial Times, 1 July 1998, p. 15

Reports statement by John Denham, Junior Pensions Minister, implying that compulsion to pay into a stakeholder pension is unlikely to extend to those on low incomes. Some extension of the compulsion to save for others remains likely.

PENSION COMPANIES CALL FOR GREATER COMPULSION

S. Buckby
Financial Times, 25th June 1998, p. 8

In a plan drawn up by Norwich Union and Standard Life and Prudential, it is proposed that individuals should be compelled to invest as much as 10% of their income to fund a "minimum target pension". Contributions for the low paid and unemployed should be topped up by government in the form of higher rebates, tax or national insurance credits.

SMALL COMPANY PENSIONS MAY CLOSE

J. Mackintosh
Financial Times, 29th June 1998, p. 6

Research by the Association of Consulting Actuaries shows that the government's plans for stakeholder pensions will lead as many as half of small companies to close their own pension schemes. The expected joint compulsory level of contribution of 10% of pay is unaffordable by both smaller companies and individuals at the present time.

TREASURY CHANGES POLICY ON PENSION REFORM

L. Halligan
Financial Times, 25th June 1998, p. 8

The Treasury has signalled an enhanced role for trade unions in provision of non-state pensions to members. In a ground breaking scheme, the Amalgamated Engineering and Electrical Union has announced that it has negotiated a deal allowing its members to join an industry-wide stakeholder scheme contracted out to Scottish Mutual.

UNISON UNVEILS STAKEHOLDER PENSION BLUEPRINT

L. Halligan
Financial Times, 26th June 1998, p. 12

The Unison model envisages employers without an occupational scheme being compelled to contribute 5% of their relevant wage bill to one of 6 new non-profit mutuals, with staff also making 5% contributions. The mutuals would be run jointly by employers, government appointees and worker collectives and would manage the pension funds.

WE ALL NEED PENSIONS: PROSPECTS FOR PENSION PROVISION

Pension Provision Group
London: TSO, 1998

Report concludes that the state's role in the provision of a basic pension is necessary and affordable. Personal pensions provide some opportunities to improve retirement incomes, and those who can save more should be encouraged to do so. To protect the low-paid who cannot afford the contributions to personal pensions, means-tested benefits levels will inevitably continue to rise. Self-employment can increase people's risk of being poor in old age, and the present exemption of the self-employed from the requirement to have a second pension is not sustainable. Occupational pension schemes have boosted some pensioner incomes, but a further rise in inequality between those who have a second pension and those who do not seems likely.

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