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Cable takes charge of abolition of UK default retirement age

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  • Cable takes charge of abolition of UK default retirement age

UK - Detailed plans for phasing out of the default retirement age will be the responsibility of Vince Cable and the department of Business, Innovation and Skills (BIS) and not the department of work and pensions (DWP) according to Iain Duncan Smith.

In his first speech as secretary of state for work and pensions Duncan Smith outlined the programme of work for his department including welfare reform, encouraging people back to work and improving pension saving.

He stated the coalition government's pensions agenda would be based on the principles of fairness, responsibility and social justice. This includes the phasing out of the default retirement age, which is currently set at age 65, to avoid penalising healthy people who want to keep working.

He said: "The idea of someone being fired just because they turned 65 is nonsense. People who are good at their job and want to work for longer should be able to do so. In my view, that's only fair. But of course this policy area rests with BIS, so the detail of how we do this is really their decision."

Duncan Smith touched on plans to bring forward the rise in retirement age, while he claimed the decision to end compulsory annuitisation at 75 will "simplify some of the rules and regulations around pensions. But it also means we will have a fairer system where people take proper responsibility for the decisions that make best financial sense for them".

But in addition to the plan to "triple-lock" the basic state pension so that it rises in line with earnings, prices or 2.5% - whichever is higher - Duncan Smith emphasised the need to encourage greater personal saving and a "vibrant private system" of pensions.

He said: "We want to encourage employers to provide high quality pensions for all their employees, and I look forward to working with employers, consumers and the industry to make automatic enrolment and increased pension saving a reality. Real freedom in retirement comes from planning ahead for the future. It would be one of the most positive changes we could make in office."

In an attempt to address this issue Aegon UK and the Association of Independent Financial Advisers (AIFA) have today published a white paper entitled Saving Britain that outlines "eight practical measures the new government could implement quickly, using current technology, infrastructure and legislation, to build a new UK savings culture".

These include introducing the facility for "save back" in shops instead of "cash back"; the introduction of school savings clubs and "social networks" of savers in the workplace or among friends to encourage saving as a regular habit.

Francis McGee, head of corporate affairs, at Aegon UK, said: "Previous attempts to boost saving in Britain have focused on very conventional approaches like tax breaks and product regulation. I don't think these can work on their own.  A savings culture is built on attitudes and behaviour.  Understanding how people naturally think and interact with one another is the key to a new, inclusive, savings society."

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