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Welfare Reform on the Web (May 2001): Pensions - UK

BROWN'S RAID ON PENSION FUNDS "A STEALTH TAX"

A. Senior

Times, Mar. 9th 2001, p. 10

Experts have uncovered a £1.5 billion a year stealth tax that arises from the Government's failure to make sufficient increases in the level of national insurance payments for pensions. The move will cost employers an estimated £1.5 bn because the Government is not meeting the whole cost of benefits for employees who have opted out of SERPS.

(See also Times, Mar. 12th 2001, p. 26)

FINANCIALLY EXCLUDED "WILL NOT TAKE UP STAKEHOLDERS"

D. Cameron

Financial Times, March 1st 2001, p. 8

Research, based on interviews in London and Grimsby, has indicated that take-up of stakeholder pensions will be minimal among those lacking access to banking and financial services.

FUNDING THE BASIC STATE PENSION

Independent Panel on Pension Reform

London: Centre for Policy Studies, 2001

The government's commitment to continue to pay future state pensions at current levels represents an unfunded liability of over £1,000 billion. Report endorses Conservative proposals to give people under 30 the option of transferring their basic state pension entitlement to a personal funded pension, with the state making an annual contribution to build up funds. The resulting pension could exceed the value of the basic state pension by between 20% and 50% under reasonable expectations of investment returns. The government should guarantee that the pay-out should at least match the value of the basic state pension in order to maximise take-up. Both a "common fund" and a range of private providers should be allowed to operate side by side.

SUPPORT FOR PENSIONERS "TO RISE TO 6% OF NATIONAL INCOME"

E. Crooks

Financial Times, Feb. 27th 2001, p. 2

Reports results of research showing that the more generous pension provision introduced by Gordon Brown, including the minimum income guarantee and the pension credit, will increase the burden of state retirement provision from 5 to 6% of national income by 2030. The extra cost implies the need for increases in taxation equivalent to 4p in the pound on the basic rate of income tax to pay for it.