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Welfare Reform on the Web (November 2004): Pensions - UK

OTHER COUNTRIES PROVIDE EXAMPLES TO FOLLOW

C. Giles

Financial Times, Oct. 13th 2004, p.3

The UK has long been known to have one of the least generous state pension systems of leading countries, but ministers and experts have drawn comfort form the fact that the incomes of pensioners are comparable around the world. That comfort has been shattered by the Pensions Commission report which described "multiple inadequacies" in the analysis and a private pension system in "significant decline"

PENSIONS: CHALLENGES AND CHOICES

Pensions Commission

London: TSO, 2004

Demographic trends suggest that the number of pensioners is set to rise massively while the number of people of working age shrinks. Britons will therefore have no choice but to work longer. The average retirement age will have to rise to 70 for men and 67 for women to maintain pensioner living standards if taxes or savings remain the same. If retirement ages do not rise, workers will either have to pay higher taxes or save more. To maintain living standards, state spending would have to rise from 6.1% of national income to 11.3%. This would mean taxes rising by £57bn. The alternative would be for saving to soar from 2.2% of GDP to 7.4%. Final salary occupational pension schemes are in terminal decline, and are being replaced by less generous defined contribution schemes. This has exposed the meanness of Britain's state pension scheme, which provides an income of just 37% of earnings, compared to 70% in Europe.

RETIREMENT ENTITLEMENT AND MONETARY-FISCAL POLICY

G.A. Swanson

International Journal of Social Economics, Vol. 31, 2004, p.818-831

Exchange-based societies widely disperse their day-to-day decisions among their members and components. The society supports the rights of individuals, who, of their own free will, enter into binding exchanges of goods-services and various forms of money-information markers. The article focuses on retirement pension entitlements. It asserts that such entitlements should be normal processes of exchange systems themselves, not add-on elements. As such, they require appropriate monetary and fiscal policy and may be administered by either government or public organisations. They should not be subject to short term political actions.

THIRD OF WORKFORCE SAVING TOO LITTLE

N. Timmins

Financial Times, Oct. 13th 2004, p.2

According to the Pensions Commission, at least 9.6m people - more than a third of the workforce - are saving too little for old age, with pensioners' incomes set to fall on average by 30 per cent by 2035. The commission said that if taxes, savings or average retirement ages do not rise, by 2035 pensioners will suffer a 30 per cent decline in their incomes

TURNER POINTS TO STARK CHOICES BUT STALLS ON RECOMMENDATIONS

N. Timmins and N. Cohen

Financial Times, Oct. 12th 204, p.3

Longer working lives and later retirement are inevitable if the next generation of pensioners is not to be worse off in old age, the Pensions Commission warns. Adair Turner, who leads the Commission will make no formal recommendations on policy in the most comprehensive review of the pensions system in years. Rising life expectancy, falling fertility and low stock market returns mean that people will have to save more, taxes will have to rise or the average retirement age will have to rise. The report is an analysis of the pension problem and of some options for change with final recommendations not due until next year.

(See also The Guardian, Oct. 12th 2004, p.1-2; The Times, Oct. 12th 2004, p.1; The Times, Oct. 13th 2004, p.1; The Daily Telegraph, Oct. 13th 2004, p.1; Financial Times, Oct. 13th 2004, p.1)

WHEN I'M SIXTY-FOUR

P. Gosling

Public Finance, Sept 24th-30th 2004, p.30-32

The article discusses the challenges facing the UK government in attempting to reform the state pension and incapacity benefit systems.

WOMEN'S STATE PENSION IS A SCANDAL, ADMITS GOVERNMENT

H. Rumbelow and C. Seib

The Times, Oct. 21st 2004, p.1

The Government has conceded that women's pensions are a "national scandal". Alan Johnson, the Work and Pensions Secretary, said he was so concerned that he was considering moves to create a "citizen's pension", so that women got the same benefit no matter how little they worked.

See also (Financial Times, Oct. 21st 2004, p.5)

WORK UNTIL 70 AND YOU GET £30,000

A. Sparrow

The Daily Telegraph, Oct. 11th 2004, p.1

Workers will be encouraged to delay their retirement in return for lump sums of up to £30,000 in an attempt to stave off a looming crisis in the pensions system. Under provisions in the Pensions Bill due to become law within weeks, people will now be able to defer drawing their state pensions in return for a lump sum payable when they start claiming. A man with an average state pension entitlement would receive £5,000 for deferring for one year, £11,000 for two years or £30,000 for five years.

(See also The Guardian, Oct. 13th 2004, p.4)

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