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

Child benefit cut could hit women's pensions, say experts

C. Hope and T. Ross

Daily Telegraph, Mar. 14th 2012, p. 14

From January 2013, anyone living in a household with a higher rate taxpayer is to be barred from receiving child benefit. Women's pensions are calculated on the basis of National Insurance contributions. Currently, full time mothers receive National Insurance credits towards their state pension. The credits are calculated based on individuals' child benefit payments, which some will lose in 2013. The Treasury insists that women will not be worse off because of the reforms, but is refusing to say how it will protect full-time mothers from losing some of their state pension.

Reinvigoration of private occupational pensions in the United Kingdom: what are the chances?

K. LeGrand

Pensions, vol. 17, 2012, p. 8-19

One of the key promises of the coalition government which came to power in the UK in May 2010 was to reinvigorate occupational pensions. To date there have been some policy initiatives which contribute to keeping this promise, but no published master plan against which progress could be measured. The reinvigoration project is thus a 'work in progress', and this article presents an overview of what has been done so far, covering plans for auto enrolment in occupational schemes, state pension reform, and abolition of the default retirement age.

Review of pensioners' taxation: interim report

Office for Tax Simplification

2012

This interim report found that the rules on taxation of retirement income were complex and confusing, and many older people suddenly found themselves burdened with self-assessment. The report stressed that advisers had not reached any conclusions about the best way to simplify rules on pensions and tax, but had identified options for further study. These included exempting the state pension from tax completely and abandoning the higher tax threshold for people of retirement age.

Tesco first major firm to increase retirement age to 67

H. Wallop

Daily Telegraph, Mar. 14th 2012, p. 1

Tesco, the UK's largest private employer, announced plans to raise the age at which workers could claim a full company pension from 65 to 67. The firm also announced that it intended to change the inflation index it uses to calculate annual pension increases from the Retail Prices Index to the cheaper Consumer Prices Index. It was claimed that other major companies were likely to follow suit.

The value of incentives to defer the UK state pension

S. Farrar, J. Moizer and M. Hyde

Pensions, vol.17, 2012, p. 46-62

The UK government is confronting the challenge of reducing the cost of the state pension while minimising the risk of poverty in retirement. This article evaluates one policy response to these challenges: incentives for the deferral of statutory retirement. The analysis shows clear financial benefits arising from deferral, particularly where the pension enhancement option is chosen instead of the lump sum payment. It is concluded that measures to encourage the take up of state pension deferral options would be beneficial.

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