Summary
PENSIONS are moving up the political agenda. This week saw the publication of the Penrose report on the Equitable Life scandal: the Government rejected compensation for those whose pensions have been damaged by Equitable's mismanagement. Now the Pensions Policy Institute has added to the debate with a proposal to end the messiness of state pension provision.
They propose a single, flat-rate "citizen's pension" of Pounds 105 per week, guaranteed to all. This would replace the complicated current system: the state pension, related to lifetime National Insurance payments, is backed by the meanstested pension credit, which in theory gives a single pensioner with no savings and no other pension a total of Pounds 102 a week. The new proposal is a sensible idea which would be simpler and fairer than the present arrangements: pensioners would not have to apply for it, and it would be far cheaper to administer than the pensions credit. The Institute also suggests linking the citizens' pension not to inflation, like the current state pension, but to earnings, which tend to rise faster. But a citizens' pension would by no means solve the pensions crisis. Aside from the problems at Equitable and some other pensions funds, the big problem is the crisis in employers' final salarybased schemes. Some of these have been left with alarming shortfalls, especially when companies go bankrupt. The Government has proposed an insurance scheme to be funded by companies to cover such problems, although that will not help those who have already lost their pensions in this way - nor the much larger number affected as companies switch to less predictable and less generous schemes linked not to salaries but the performance of the stock market. The wider problem is simply that people do not save enough for retirement, and Government efforts to change that - notably the unpopular "stakeholder pension" - have evinced little interest from savers. All political parties will shortly have to grasp the nettle of pension reform - and not a moment too soon.See the full content of this document
Extract
Plugging the Pensions Gap
University places
AT LAST a figure of enormous stature in the university world has called a spade a spade. Sir Richard Sykes, r...See the full content of this document
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