Pension reform gives nod to retirement at 68

Pension reform gives nod to retirement at 68

	Published : Fri, 26 May 2006 12:40 By : Cedric Benson Print this Story

LONDON - The Pensions Reform White Paper released today has been called a "bold blueprint" by Prime Minister Tony Blair. However there are several provisions that could effectively undermine it.

Work and Pensions Secretary John Hutton alluded to one such get-out clause in his speech to MPs. He said that while the government was committed to linking up basic pension to earnings, it would only happen at the start of the next government and would be "subject to affordability and the fiscal position to do this in 2012, but in any event by the end of the parliament". He added that it would come into effect by 2015 at the latest. "I believe it can lay the foundations for a lasting solution to the pensions challenge we face," Hutton said of the White Paper.

This document was the government's stand after the pensions report released by Lord Adair Turner's pensions commission last November. The proposed National Pensions Savings Scheme (NPSS) had caused concern in the industry that they would be deprived of billions in income. However this does not seem to have borne out. Trevor Matthews, chief of life and pensions at Standard Life, said that the White Paper was "as good as we could have realistically hoped for". The government has assured the industry that it would consult them in who should operate the NPSS.

"It is now generally accepted that we need to get people saving more ... There was never going to be an easy answer to this problem, but this paper is a reasonable outcome," Matthews said. The Federation of Small Businesses (FSB) has also welcomed the paper but has sought assurances from the government that it would keep its promises of helping SMEs. "Discussions in Downing Street saw all the business organizations united in their concern about the impact the proposals would have on small businesses and their employees," said Andy Willox, of the FSB.

Another controversial provision in the paper is the fact that millions of young people will only receive £3 a week more for working until 68. Philip Hammond, the Conservative work and pensions spokesman has broadly welcomed the Paper, but said that many were uncomfortable with the affordability provision.