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

Brussels 'threatens pensions and jobs'

J. Hall

Daily Telegraph, Feb. 14th 2012, p. 1 + 2

The European Commission is considering new regulations that will require companies with final salary pension schemes to pump billions of pounds into them to reduce their deficits. Business leaders and unions have written to the president of the Commission, warning him that the plans would at best force all remaining defined benefit schemes to close, and at worst, push many companies into insolvency, leading to significant job losses.

Gold standard pensions consigned to history

J. Kirkup and R. Winnett

Daily Telegraph, Feb. 13th 2012, p. 1 +4

Lord Freud, the pensions minister, warned that a combination of tax changes, falling annuity rates, poor investment returns and increased longevity meant that the generous private and occupational pensions enjoyed by current retirees were a thing of the past. The minister admitted that UK pensions no longer represented a 'gold standard'.

Osborne urged to offer low-cost annuity deals to pensioners

J. Hall

Daily Telegraph, Feb. 13th 2012, p. 4

Lord Myners, a former City minister, wrote to the Chancellor of the Exchequer proposing an overhaul of the private and occupational pensions market to prevent savers being hit by high fees and low retirement incomes. Under his proposals, the government would enter the annuities market as low cost competition to the insurance companies that dominated the industry. Lord Myners said that the arrival of the government in the annuities industry would address systemic failures in the shape of excessive management costs and fees taking a big slice out of people's pensions.

Poor pension choice can cut annual income by two-thirds

J. Hall

Daily Telegraph, Feb. 9th 2012, p. 16

Research from the National Association of Pension Funds and the Pensions Policy Institute showed that high charges, poor annuity rates and other pitfalls could reduce a worker's retirement income by two-thirds. Both organisations warned that people could end up working into their seventies to make up for the financial shortfall in their pension. Saving into a pension from an early age, paying more into it, and working longer could significantly improve retirement income.

Public pension cuts backfire

R. Winnett

Daily Telegraph, Jan. 31st 2012, p. 1 + 4

According to detailed analysis published by the Institute of Fiscal Studies, negotiations over the reform of public sector pensions would not lead to a reduction in costs to the state. Millions of lower-paid public sector workers would in fact receive higher pensions. They would also continue to earn significantly more than their counterparts in the private sector. On the other hand, higher paid workers would lose out under the proposed move to a career average scheme, which also involved their paying higher contributions. The Institute's conclusion did not take into account other recent changes to public sector pensions, including the decision to raise the retirement age for public employees to 65 and link increases in their pensions to the Consumer Prices Index measure of inflation.

(See also Daily Telegraph, Jan. 31st 2012, p. 4 for note of acceptance of government offer on pensions by the Association of Teachers and Lecturers)

Public sector unions warn of more strikes

H. Mulholland

The Guardian, Feb. 10th 2012, p. 19

The government faced the threat of renewed industrial action over its controversial pension reforms after unions representing hundreds of thousands of NHS workers, civil servants, firefighters and teachers raised the prospect of widespread strikes. Leaders of more than 700,000 public sector workers warned of co-ordinated strikes on 28 March 2012 over proposals to raise pension contributions, lower pensions and raise retirement ages.

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