03.07.09

Pension Reform Recommendations Should Have Been More Radical says Turner

The Pensions Commission’s recommendations should have been more radical says Lord Turner, the man who headed it.  Not only should state pension age be going up to 70, instead of 68 as currently planned, it should be happening sooner. 

Many of the Commission’s recommendations were accepted and are set to come into effect but speaking to the BBC, Lord Turner, now head of the Financial Services Authority, said that in the light of what has happened since the report was published four years ago, if he was redoing it today he would have been more radical.  State pension age rising to 70 by 2030 was a case in point.

He also thinks that public sector workers should move from final salary pensions to ‘career average’ schemes in order to make them sustainable.

His comments came after a steady stream of bad news about pensions. 

An increasing number of companies are now closing their final salary schemes to existing members on the back of rising scheme deficits.  Latest figures predict that scheme deficits hit their highest levels in June for three years.  According to data from Aon Consulting, the combined deficit of final salary schemes at the UK’s top 200 listed companies was £73 billion at the end of last month – the highest level in three years – compared with £40 billion in May. 

Just to further highlight the pension issues many people and the country are facing -  a new study has found that nearly 4 out of 10 (36%) of adults who are not already retired do not have a personal or a company pension in place. 

The research by YouGov, commissioned by Employee Benefits adviser Foster Denovo,  also highlighted that more than a quarter (28%) of people aged between 25 to 44, do not have any provisions – such as property, inheritance or savings – in place for retirement. And 11% of this age group confirmed that they had not yet considered how they would cope financially at the end of their working life.

A quarter (25%) of those surveyed stated that they believed they would need to work to the ages of 70 to 79. This figure rose to 31% for the 25 to 34 year old age group.

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