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Welfare Reform on the Web (January 2012): Pensions - UK

Pay squeeze a barrier in talks on pensions, unions warn

D. Milmo, P. Wintour and J. Shepherd

The Guardian, Dec. 2nd 2011, p. 5

A renewed pay crackdown on public sector workers would have 'negative' consequences for talks over pension reform, the head of the TUC warned, as discussions between the government and trade union leaders resumed in the wake of a national strike on November 30th. Brendan Barber, the lead negotiator in talks with ministers, said the announcement of a further pay squeeze on public sector workers in the 2011 Autumn Statement had thrown up a new barrier to progress. 'The landscape has been changed in a negative way by these arbitrary announcements in the Autumn Statement. In particular, the prospect of another period of rigid pay restraint means that real-terms pay cuts will continue. That is the worst possible background for considering these issues.'

Pensioners to lose thousands as funds redefine inflation

J. Kirkup

Daily Telegraph, Dec. 2nd 2011, p. 4

Members of occupational pension schemes face losing tens of thousands of pounds in retirement income if funds switch annual increases in payments from the Retail Price Index (RPI) measure of inflation to the lower Consumer Price Index (CPI), which does not include housing costs. About a quarter of occupational pension funds are legally able to switch from RPI to CPI. Pension funds are under stress, and switching to CPI increases could give them breathing space by reducing their liabilities.

Unions reject new pensions offer to help the lowest paid

C. Hope

Daily Telegraph, Dec. 9th 2011, p. 15

In the long running dispute over public sector pension reform, the Department of Health offered to defer raising the pension contribution of NHS staff earning less than 26,557 for one year. Increased contributions would be levied from higher earners instead. Health unions dismissed the offer.

(See also the Independent, Dec. 9th 2011, p. 6-7)

What are the implications of the UK government's policy to remove the effective requirement to annuitise private pension funds by the age of 75?

D. Silcock

Pensions, vol.16, 2011, p. 277-284

From April 2010, the UK government removed the effective requirement for people with private pension savings in defined contribution schemes to purchase an annuity by age 75. The aim of the policy is to allow people to access their pension funds in a more flexible way. People with large pension savings may be able to withdraw some or all of the cash if they can demonstrate that they can meet the government's minimum income requirement of having a secure pension income, in payment and guaranteed for life, of at least 20,000 per year. In addition, individuals will be able to use income drawdown beyond 75 years, to invest their funds and withdraw income from their private pension savings within certain limits set by the government (capped drawdown). This article examines the trade-offs between the flexibilities and risks encompassed by the new policies and also explores what the policies might mean for how people in the UK could access their private defined contribution pension savings in future.

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