Pensions bill published
Wednesday, 29 November 2006 12:00
After years of wrangling in public and private the future direction state and private pensions will take has been revealed.
Plans to implement a national pensions savings scheme - seeing all employees automatically entered into a company pension scheme - and raise the retirement age to 68 were all published by the government today in its pensions bill.
The bill is a response to the looming pension crisis in the UK, where fewer people are saving for their retirement, company pension benefits are being cut, and as Britons live longer there are more pensioners than ever before - meaning the state pension will take up more of taxpayers' money while the number of taxpayers declines.
However, on such a controversial issue, there are also concerns.
There are heavy criticisms of the reforms to the state pensions system - which are designed with the aim of giving women and carers a fairer deal and ensuring a solid safety net for those that have not saved into a private pension.
Reforms to the second state pension, which offers people who pay more in national insurance more money in retirement, and continued reliance on means testing in retirement drew comment in particular.
Pension giant Aegon pointed out that, with means testing continuing to play a large role, "the industry can't say with confidence it pays for all to save". This is because by saving money you could disqualify yourself from government funds and actually end up worse off.
"We need clear consensus as to the direction we should take on encouraging private pension saving for the future," said Steven Cameron, head of business regulation at Aegon.
"Can we safely say it pays everyone to save or should we take account of personal circumstances? The debate on the pensions bill is the perfect opportunity to establish a road map for the industry to follow."
Major changes planned under the pension bill
- State pension to rise in line with earnings
- Women and carers to get credit for time away from work, so they do not lose out on pensions by looking after families.
- Reform to the second state pension (S2P) aimed at creating a flat extra payment at one level only.
- State pension age to become equal for men and women by 2020 and rise to 68 for all by 2046.
- The creation of a national pension savings scheme which employees can take with them from job to job and employers and the government contribute to.
The full pension bill can be found here http://www.publications.parliament.uk/pa/pabills.htm
Comments
Newsletter sign up