Financial Times, July 10th 2002, p. 4
Company pensions consultancy firm Mercer argues for the abolition of the second state pension, minimum income guarantee and pensioners' tax credit. In compensation, the basic state pension would be doubled. This reform would provide clear incentives to people to save for their retirement and allow employers to offer flexible benefit payments and retirement ages.
A. Bolger, K Guha and L Killgren
Financial Times, July 4th 2002, p. 2
A survey by Mercer pension consultants of 146 members of the FTSE 350 found that 61% of the pension funds would have been in deficit last year if measured under the FRS 17 accounting rule. Thirty-eight per cent would have had deficits that were 10% more than their liabilities. FTSE 100 companies fared better, with only 47% of funds being in deficit.
Guardian, June 27th 2002, p. 24
Corporate greed, malfeasance and false accounting in the US have caused falls in stock markets world-wide. This in turn is hitting British pension funds.
M White & P Collinson
The Guardian, July 2nd 2002, p. 1
The government last night added a fresh dimension to rising public alarm about the state of occupational pensions when it apologised for newly discovered statistical errors which may have overestimated the scale of £86bn worth of annual savings by as much as £30bn. The mistake means that ministers have seriously under estimated a problem laid bare by the two year decline of the stock market into which most pension assets are locked.
Guardian, July 3rd 2002, p. 20
The Association of British Insurers estimates that people need to save £27bn more a year for retirement than at present. It is proposing at a new Pension Contributions Tax Credit to encourage employers to contribute more to workers' pension funds. It is also suggesting a tax rebate giving employers help towards meeting the costs of making financial advice available to staff.
(See also Independent, July 3rd 2002, p. 20; Daily Telegraph, July 3rd 2002, p. 30)
Independent, July 3rd 2002, p. 17
A lot of the money that the government thought was new investment in pensions was actually people moving their savings from one company to another. This means that the pot of money available to fund retirement will be less than the government thought. Secondly, younger people will pay out a great deal more in national insurance contributions than they will ever receive in state pensions and are being in a sense defrauded. The solution to the pension crisis lies in encouraging people to save more and work longer.
London: Treasury, 2002
Recommends encouraging people to save for their retirement through the introduction of simple "stakeholder" products, which could be sold over the counter and heavily regulated with built-in safety warnings. The products could involve a pension, a mutual fund and a with-profits policy and would be designed by the government and a regulator with a defined investment profile. They would have a price cap, no initial charge and strictly regulated exit penalties.
Daily Telegraph, June 27th 2002, p. 2
The Conservative leader Ian Duncan Smith claims that the removal of dividend tax relief for occupational pension funds in 1997 coupled with changes in 2002 to the terms for contracted out pension holders has resulted in an average of £530 being slashed from contributors' savings every year.
Guardian, June 26th 2002, p. 18-19
Companies are rapidly closing their generous defined benefit pension schemes and switching to defined contribution schemes. In these schemes employee contributions are matched by the employer and the money invested in the stock market. The size of the eventual pension depends on the performance of the market. Defined benefit pension schemes have been undermined by stock market volatility, increased longevity, and the impact of the FRS 17 accounting standard.
London: 750, 2002
In order to discourage employers from closing their final salary pension schemes, proposes giving them more control over costs. They would be allowed to offer pensions that are not indexed to price rises and do not offer survivor benefits.