The Guardian, Mar. 8th 2011, p. 8
A flat rate state pension of £140 (or more) a week will be announced by Iain Duncan Smith, indicating that he has won Treasury's backing. The reform will mean that all pensioners will receive the same state pension regardless of how long they have worked or how much they have earned.
The Guardian, Mar. 9th 2011, p. 25
Private sector employers are closing down their final-salary schemes at a record rate, according to a new report by the National Association of Pension Funds (NAPF) that reveals that huge numbers of existing staff are losing the much-coveted benefits along with new employees. The NAPF's latest Annual Survey showed that one in five (17%) schemes have closed to both new and existing members. This was a record jump from 7% in the previous survey in 2009, and just 3% in 2008.
This report on the reform of public sector pensions recommends that most state employees should be required to work until retirement pension age, due to rise to 66 by 2020. Armed forces personnel, firemen and police officers, who can currently retire in their fifties, will be denied a pension until they reach 60. It recommends the replacement of the current final salary pension scheme with a career average earnings system by 2015. Accrued rights will be protected, and the final salary link maintained for past service for current members. The report also calls for a cap on taxpayer contributions to schemes, resulting in employees being forced to pay substantially more.
(For union reaction see Daily Telegraph, Mar. 7th 2011, p. 4)
The Times, Mar. 14th 2011, p. 21
Ministers are on a collision course with some of the country's most senior legal figures over plans to make judges pay more into their pension pot.
Daily Telegraph, Mar. 2nd, 2011, p. 4
The European Court of Justice has ruled that insurance companies can no longer use gender to calculate the rates offered on annuities, which are used to convert pension pots into an annual income. Men are not expected to live as long as women, and so have received higher rates, giving them a larger annual income to enjoy during their retirement. These deals will now be brought into line with the lower rates offered to women, meaning that men will lose about £300.00 of retirement income a year.
(See also Daily Telegraph, Feb. 28th 2011, p. 2)
The Guardian, Mar. 8th 2011, p. 15
The government is facing the biggest test of its relationship with the unions with the publication of Lord Hutton's report which will overhaul the pension system currently in place for 6 million public sector workers. The report will argue that teachers, hospital workers and police officers contribute more to their pensions, that the most generous schemes based on final salaries should end, and that some people should work up to five years before longer to claim their full pension entitlement. The moves are vital to reduce the pension bill, which is stretching the limits of affordability as people live longer and longer, the report will say.
(See also The Guardian, Mar. 10th 2011, p. 1; The Guardian, Mar. 11th 2011, p. 6)
Daily Telegraph, Mar. 8th 2011, p. 1 + 2
In a speech to charity leaders and pension experts, the work and pensions secretary Iain Duncan Smith condemned the current state pension system as a bureaucratic mess that leaves many people confused about their entitlements. He proposed replacing it in the long-term with a single flat rate payment and scrapping means-tested top-ups that punish private savers.
Public Finance, Mar. 2011, p. 36-39
The report of the Hutton Commission on the reform of public sector pensions is due to be published before the 2011 budget. The Commission is expected to recommend that public employees contribute significantly more to their pension schemes. An increase in pension contributions combined with pay restraint, tax and National Insurance increases, benefit reductions and inflation approaching 5% could lead to many public sector employees, particularly the low-paid, withdrawing from schemes and abandoning pension saving altogether. A reduction in public sector pension scheme membership could have adverse consequences for the public finances, as the government relies on current contributions to fund the pensions paid to retirees.
P. Subacchi and others
Chatham House, 2011
This report warns that middle-class workers need to save an extra 10% of their income or face a dramatic fall in their living standards in retirement. More than 15m households will be unable to maintain their current living standards after retirement, with many losing half their income. It argues that the government has a limited window of opportunity to introduce new policies to encourage saving among people aged 45 to 64. It calls on ministers to match pension savings for this high risk group and to consider guaranteeing annuity rates paid to those retiring with private pensions.
The Times, Mar. 11th 2011, p. 16
A summer of strikes by millions of public sector workers over pension reforms is anticipated if the Government's plans go ahead.