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Welfare Reform on the Web (June 2002): Pensions - UK

GOVERNMENT SCHEME FAILS TO SPUR PEOPLE TO BOOST PENSION SAVING

N. Lee and N. Timmins

Financial Times, April 8th 2002, p. 1

A key government initiative aimed at boosting private pension saving looks to have flopped in pilot tests. More than 15m people are due to receive an annual "combined pensions statement" by 2005, setting out what they are likely to get from both the state and their own pensions. Ministers had hoped when people saw how little they would have to live on they would take out new pension cover or increase their contributions. But in trials more than 90% failed to act on the statement, according to Financial Times research.

RISK AND TRANSPARENCY IN PENSIONS

R. Mendoza and P. Hancock

Financial Times, Mar. 20th 2002, p. 29

Suggests that companies analysing their response to the FRS 17 accounting standard should encourage pension fund trustees to move assets from equities into bonds instead of closing their defined benefit pension schemes. This would reduce volatility in their income statements while preserving fixed retirement benefits for their employees.

SECOND STATE PENSION "SHOULD BE SCRAPPED"

N. Timmins

Financial Times, Apr. 11th 2002, p. 5

Pension Consultants Watson Wyatt have told a government review that the state should cease to provide a second-tier pension, limiting itself to basic provision. Employers should then be given more freedom to design the type of occupational pension they want to offer.

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