Longer working life ahead for British?
As IPE went to press UK pensions professionals as well as the wider public were preparing for the final report of Lord Turner’s Pensions Commission.
The contents of the long-awaited report were leaked to the press, with the highlight expected to be a call for a more generous state pension in return for a longer working life, until age 67. Also expected was a new national savings plan into which individuals will automatically be enrolled, modelled on New Zealand’s planned ‘Kiwisaver’.
Whatever suspicions there may have been about the leak being calculated to prepare public opinion, what is clear is that it provoked widespread reaction.
The Institute of Actuaries called for the Commission to recognise the changing nature of retirement. The institute’s president, Michael Pomery, noted that “swathes of people across middle England” would struggle because current retirement products can’t adapt to flexible retirement.
“We hope that Adair Turner and others will grasp the implications of this shift as soon as possible. As final salary schemes decline and millions of our citizens have to take responsibility for their savings in retirement, the products currently on the market are patently not up to the job.” And in terms of the state pension, the actuaries say a simple way to alter the relationship between means testing and the basic state pension would be to increase the level of basic state pension. The institute called the Citizen’s Pension idea “misplaced” - although it acknowledged the system must be simplified.
It does not support any increase in compulsory savings, beyond that achieved via National Insurance contributions.
The Amicus public sector union said: “We will not support any opting out and will remain firmly opposed to any increase in the retirement age. While we support an increase in the basic state pension any increase in retirement age will be opposed by Amicus.”
Tony Baily, pension consultant at Hewitt Associates, said: “One thing he should be applauded for is state pension age - it’s untenable to keep as is. You can only stretch the money so many ways.”
He said raising the retirement age to 67 was “only just keeping pace” with mortality improvements. And he flagged the risk of unintended consequences in automatic enrolment in terms of the impact it could have on existing DC schemes.