Azara Blog: Turner's final report on pensions released

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Date published: 2006/04/04

The BBC says:

Lord Turner has used the final report of the government's Pensions Commission to defend his pension reform plans.

The commission proposed a state pension age rise from 65 to 68 by 2050 and that future increases should be linked to earnings rather than inflation.

The report has sparked a row between Prime Minister Tony Blair and Chancellor Gordon Brown over whether the plans are affordable.

Lord Turner said that taxes may have to rise to pay for higher pensions.

He stated that the costs were "not significantly higher" than the government's current pension spending plans.

But without reducing means-testing, Lord Turner warned that the entire programme of pensions reform may not work.

He added that most pensions experts and interest groups believe the commission should have proposed a "more radical" rolling-back of means-testing.

"The government now faces the difficult decision of how far and how fast it can move to reform of the state pension," Lord Turner said.

It has been widely reported that the chancellor is unhappy at Lord Turner's proposal to end means tested pension credits and raise the state pension in line with earnings rather than inflation.
...
The Pensions Commission proposed the setting-up of the National Pension Savings Scheme (NPSS), which many workers would be automatically enrolled into.

This would allow people who were not part of an employer's pension scheme to take part in an occupational pension programme.

They would contribute 5% of their salary, with their employer paying in an extra 3%.

The NPSS proposal has drawn fire from some pensions industry insiders.

Organisations including the Association of British Insurers and the National Association of Pension Funds have said that the NPSS would be more expensive to administer than Lord Turner presumes.

In addition, the Confederation of British Industry (CBI) has called for employers to have an opt-out from the NPSS.

It suggests the costs of the NPSS would prove a heavy burden on business and could ultimately cost jobs.

Nothing much new here. Gordon Brown is the main barrier to pension reform. The retirement age should go up. Means testing (and all the other ridiculous state pension complications) should be reduced. The main worry about the proposals is the NPSS. This could have a serious impact on small business. It is also forcing people to make investments which might go wrong. The main beneficiary will be the financial services industry, not future pensioners.

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