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

BLAIR PLANS COMPULSORY PENSIONS

A Grice

The Independent, 24th May 2002, p.1

The government is to consider forcing people to take out pensions to avoid a future where millions have inadequate retirement income. Rejected by the government in 1998, compulsory pensions for people not in company or personal pension schemes are now back on the agenda because of the looming pensions timebomb.

INCOME IN LATER LIFE: WORK HISTORY MATTERS

E Bardasi and S P Jenkins

Bristol: Policy Press, 2002

Study examined the relationship between the risk of having a low income in retirement and people's lifetime employment history. A reduction in low-income risk was associated with more years of paid work for men in professional and personal and productive services occupations, and for women in managerial, professional, technical and clerical occupations. Low labour market participation between the ages of 50 and 60 raised the chance of low income in retirement for men in clerical, craft, personal and protective services, and sales occupations. In contrast, for women, low labour market participation at the same age had little association with risk of low income at 60+. Women aged 60+ living without a partner had a substantially higher risk of low income than those living with a partner, even if they had worked for much of their life.

MOVE TO STEM TIDE OF EARLY RETIREMENTS

K Guha, N Timmins and A Joliffe

Financial Times, June 24th 2002, p.3

Measures designed to stem the tide of people taking early retirement are being drawn up by ministers. Pensions rules will be amended to encourage work until 65. The government is concerned about the number of men who retire early; 27 per cent of men between 50 and 65 do not work compared with 23 per cent in 1984. Many of those who took early retirement or went on incapacity benefit wanted to work, but were discouraged from doing so.

PENSIONS PERIL FOR MILLIONS AS SHARES PLUMMET

A Senior, G Duncan and T Baldwin

The Times, June 17th 2002, p.1

Plummeting stock market prices around the world are sounding the death knell for generous workers' pensions, according to research published by the Association of Consulting Actuaries (ACA). The research concludes that falling stock markets, longer life-spans and an increasing regulatory burden have threatened pay-linked schemes. More than 60 per cent of final salary pension schemes are now closed to new members and almost half of those still open are considering closing their books. Pensions experts said the demise of the final salary scheme would leave workers facing a 40 per cent reduction in their retirement income. Roger Lyons, general secretary of Amicus, the UK's second largest union, said this would mean "pensioner poverty" for about seven million workers and their families.

SMALLER COMPANIES PLAN TO END FINAL SALARY SCHEMES

J Croft

Financial Times, May 29th 2002, p.6

A study commissioned by Hazell Carr, consulting actuaries, has shown that more than a fifth of 100 companies questioned plan to close their final salary pension schemes to new entrants, while 3% intend to wind up their scheme. Companies cited stock market volatility, increased costs and low investment returns as the main threats to their pension schemes.

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