After 3 years of research and discussions, Lord Turner is due to officially announce his proposals for reform to UK pension law.
We've already discussed
debt and retirement and the forthcoming pension crunch; caused by a change in demographics and pressure on savings because of mortgage and other loan debts. Everyone agrees, there is a "pensions crisis" looming, and it's been suggested that if the status quo continues, in 2050 the UK state pension will be 10% of average salaries, pushing many pensioners further into poverty.
Lord Turner has been given the task of finding a solution to take the UK into the next half of this century that is both sustainable, and politically acceptable.
Unfortunately for Lord Turner, UK Chancellor Gordon Brown has apparently rejected his planned reforms before they have been officially published, deeming them to be "unaffordable".
Lord Turner consulted employers, trade unions, and pension experts for ideas on how best to construct a pension system. The core proposals of Lord Turner's will likely include:
- The creation of a new "Britsaver" pension scheme for which workers will automatically have 4% of their salaries deducted, with contributions of 3% from employers and 1% from the government.
- The end of the unpopular means-tested state pension, with an increase in the basic allowance to compensate. Future increases will be linked with earnings, rather than the UK inflation rate.
- The raising of the retirement age for which workers will qualify for a state pension to 67; and some have even suggested the report will suggest increasing this to 69.
Chancellor Brown had reportedly attacked the restoration of pensions and earnings as being a backward step, and even implied Lord Turner had both got his figures wrong, and exceeded his brief by proposing re-establishing the link between pensions and earnings. Some accused Brown of trying to "sabotage" the plans with a pre-emptive strike before they'd even been published. Indeed, Prime Minister Tony Blair was forced to defend the report, saying nothing is ruled out when discussing pension reform.
Gordon Brown will likely succeed Tony Blair into Downing Street though and many would argue, is keen to assert his influence at a critical time.
