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Welfare Reform on the Web (February 2011): Pensions - UK

500,000 women to lose out in changes to retirement age

P. Curtis

The Guardian, Jan. 14th 2011, p. 15

More than 500,000 women approaching retirement age will have to wait at least a year longer before collecting their state pension after ministers accelerated moves to equalise the pension age between men and women to 65 from 2018 and then raise it to 66 from 2020. Charities condemned the move to accelerate the changes (the previous government had planned to increase women's pension age to 65 from 2020) which they said would disadvantage women. The government also announced the scrapping of the default retirement age at 65, ending what campaigners have described as 'institutionalised age discrimination'. Employers, however, condemned the move claiming they will lose flexibility in managing their workforce, contrary to the government's stated desire to boost enterprise and create jobs.

Governance and governmentality: a discussion in the context of UK private pension provision

P.J. Ring

Economy and Society, vol. 39, 2010, p. 534-550

The governance of pension schemes has become a more prominent issue in the UK in recent years. The issue has arisen when there has also been a paradigm shift in private pension provision as employers have moved decisively from defined benefit to defined contribution schemes. The introduction by the government of personal accounts (a form of individualised defined contribution provision) is likely to further the prevalence of DC arrangements in the UK. This article contrasts the narrow technical debate currently being conducted about the governance of UK pension arrangements with a broader, theoretical analysis of the governance of pension saving behaviour. It illustrates the way in which the art of government (governmentality) has been deployed in very specific ways in relation to the issue of income security in retirement for the population, and the implications of this for attempts to govern individual behaviour. Attention is drawn to efforts to empower individuals through their savings behaviour, and to transform their conduct to create responsible citizens who save for retirement.

The impact of the 2007-08 changes to public service pensions

National Audit Office

London: TSO, 2010 (House of Commons papers, session 2010/11; HC662)

This report provides a systematic analysis of the impact on future cash costs to taxpayers of changes made in 2007 and 2008 to pension schemes covering the civil service, NHS and teachers. The 2007-08 changes affected schemes that account for nearly three-quarters of UK public service pay-as-you-go pension payments and were the first financially significant changes to these schemes since the 1970s. There were immediate increases in employee contributions for NHS staff and teachers, following earlier increases for civil servants. The normal pension age was raised for new staff, from 60 years to 65 years in most cases. In addition, a new cost-sharing and capping measure was introduced to transfer, from employer to employees, the risk of extra costs from changes in factors such as pensioners living longer than previously expected. However, the report warns that the value for money of the changes cannot be demonstrated, because the Treasury and employers did not agree the long term role of pensions in recruitment and retention of staff and the Treasury no longer has a financial objective against which to monitor the impact of the changes. In addition, the Treasury has not managed the risk that overall costs to taxpayers will be greater as a proportion of GDP, if growth in GDP is permanently less than expected.

Pension payouts will be cut under reforms

M. Butterworth and J. Kirkup

Daily Telegraph, Jan. 13th 2011, p. 1 + 2

The government's Pensions Bill sets out their plans to automatically enrol all employees into a pension scheme. Under the new system, employers will pay 3% of salary into an employee's pension pot. Workers will pay 3% of salary and the government a further 1%. At present firms pay between 6 and 10% of salary into the average defined contribution scheme. There are concerns that under the new statutory system companies will seek to reduce costs by dropping their contributions to the legal minimum of 3% of salary. This well-meaning reform could leave workers much worse off in retirement.

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