Welfare Reform on the Web (November 2010): Pensions - UK

'Pay more, retire later' plan for public workers

P. Curtis and R. Ramesh

The Guardian, Oct. 8th 2010, p.11

There has been considerable anger from public sector unions over Lord Hutton's plans for 6m public sector workers to pay more for their pensions and retire later. Many unions are expected to ballot their members if pension contributions are raised considerably following the spending review on the 20th October. Brendan Barber, the general secretary of the TUC said 'Public workers are already facing job cuts, a pay freeze and increased workloads as they are expected to do more with less.'

(See also The Times, Oct. 8th 2010, p.12-13)

Pension tax allowances slashed for the rich

S. Arnott

The Independent, Oct. 15th 2010, p. 44

The government is to slash high earners' tax free pension allowances from £250,000 to just £50,000 a year; a move expected to raise £4bn for the Exchequer.

Pensions 'headache' for small companies

M. Butterworth and R. Tyler

Daily Telegraph, Oct. 28th 2010, p. 18

From 2014, all employers, including small businesses, will be legally obliged to enrol staff earning more than £7,475 per year in company pension schemes unless employees choose to opt out. Small employers claim that this rule will impose an administrative headache and extortionate costs on them. At the same time, statutory contribution levels are set so low that lower earners will struggle to build up an acceptable pension pot.

Unions warn of unrest in face of sweeping pension cuts

P. Curtis

The Guardian, Oct. 6th 2010, p.7

Under proposed reforms millions of public sector workers will face a cut in their take-home pay and a rise in their retirement age. Union leaders have warned that pensions are the one issue which will affect all public sector workers and are therefore the most likely issue to trigger a general strike.

(See also Financial Times, Oct. 7th 2010, p. 4)

State pension rise only for newly retired

P. Hosking

Times, Oct.26th 2010, p. 21

Reports that news of a major reform to the state pension system had leaked out. The aim of the radical reform would be to introduce a universal flat rate pension of £140.00 per week based on residence. This would replace the present system of entitlement to a basic state pension based on national insurance contributions, supplemented by a complex array of means-tested benefits. The new flat rate pension would help millions of women who have not made sufficient national insurance contributions to qualify for a full state pension under present arrangements. However, the new system is expected to be phased in only as people reach retirement age, leaving 12.8m current pensioners in the old regime.

(See also Daily Telegraph, Oct. 26th 2010, p. 12)

Up to 80% of pension contributions 'lost in fees'

M. Beckford

Daily Telegraph, Oct. 4th 2010, p.4

A documentary made for BBC Panorama has shown that savers are losing as much as 80% of their private pension contributions in fees and commissions. The investigation uncovered figures showing that Britons are retiring with pension pots worth 50% less than their European counterparts because of the fees. Charges have risen because fund managers now trade shares invested on behalf of customers much more frequently, rather than investing for the long term.