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Welfare Reform on the Web (April 2000): Pensions - UK

OLDER, BUT NO WISER

M. Wolf

Financial Times, Jan. 4th 2000, p.15

Argues that trends towards early retirement need to be reversed by raising official retirement ages in line with rising life expectancies, by making the labour market more flexible to absorb older workers at lower wages, by the encouragement of retraining, by the promotion of private savings and by the elimination of incentives to retire early.

PENSIONS PLAN WILL NOT INCLUDE SMALL EMPLOYERS

N. Timmins

Financial Times, Jan. 10th 2000, p.1

Revised plans for stakeholder pensions provide:

  • for employers with fewer than five staff to be exempt from having to make them available;
  • for the minimum contribution to be £20.00 per month;
  • for an annual management charge of only 1% to be levied by providers.

THE PROPOSED STATE SECOND PENSION

P. Agulnik

Fiscal Studies, vol. 20, 1999, p.409-421

The UK government has recently proposed radical changes in second-tier pension provision, with the existing SERPS being replaced by a new State Second Pension (SSP). Paper describes how the new scheme differs from its predecessor and calculates the distributional effects of the reform. Analysis shows that, because the new scheme will be partially flat-rate, low earners will receive significantly higher pensions than they would have got from SERPS. However, because the scheme will be financed from National Insurance Contributions, the burden of paying for the SSP will be heaviest for people with an income at the upper earnings limit.

SHIFT TO MONEY PURCHASE PENSIONS SPARKS WARNING

N. Timmins

Financial Times, Jan. 28th 2000, p.3

Warns that the growing shift to money purchase occupational pension schemes, which the government's new stakeholder pension may accelerate, risks leaving people with very low retirement incomes if ill-health stops them from working. It may be necessary to introduce compulsory insurance against sickness and incapacity.

STAKEHOLDERS' MAY HURT PROVISION OF PENSIONS'

A. Bolyer

Financial Times, Jan. 26th 2000, p.3

A survey of 150 organisations found that half believed that the introduction of low-cost stakeholder pensions would make it less likely that employers would want to offer occupational pensions. Almost three-quarters believed the governments proposals would accelerate the trend by employers to switch to money purchase provision and away from final salary schemes.

TOP INSURERS, BANKS AND RETAILERS TO OFFER STAKEHOLDER PENSIONS

N. Timmins and A. Bolyer

Financial Times, Jan. 12th 2000, p.1

Nine of the UK's top 10 life insurance companies and some key retail banks have decided to offer stakeholder pensions in spite of strong industry criticism of the scheme.

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