Pensions Challenges and Choices
By Paul Cummins FCCA AITI MSc.Multimedia Systems
5 November October 2004
The First Report of the UK independent Pensions Commission, entitled “ Pensions Challenges and Choices” published in October 2004 presents the Commission's conclusions on the adequacy of pension provision and saving in the UK . It sets out the major challenges society faces and the unavoidable choices which need to be made.
The full Report, ‘Pensions: Challenges and Choices,' is available at www.pensionscommission.org.uk . The independent Pensions Commission was established in December 2002 following the Government's pensions Green Paper. The Commission's terms of reference are in summary: “to keep under review the regime for UK private pensions and long-term savings, and to make recommendations to the Secretary of State for Work and Pensions on whether there is a case for moving beyond the current voluntarist approach.” The full terms of reference are available on the website.
In reading the report, It is important to note the difference between retirement age and state pension age. Retirement age is the age at which individuals actually retire: this varies by individual and is currently in the UK 63.8 for men and 61.6 for women on average. State pension age is the age at which people can draw their state pension: currently 65 for men and 60 for women. An increase in retirement age can occur without any change to state pension age. Indeed people can work and simultaneously draw their state pension or choose to delay drawing it and build up an enhanced entitlement.
Some of the graphics on the website http://www.metaphorbusinessgraphics.com will assist in simplifying the concepts
The report concludes that present data sources are significantly deficient as a basis for some aspects of evidence-based policy. It makes a number of recommendations relating to improvements in official data sources, which are listed in the Annex to the Main Report and in Appendix A.
Adair Turner is the Chairman of the Commission and is also Vice Chairman of Merrill Lynch Holdings Ltd, a director of United Business Media plc and Chair of the Low Pay Commission. The other commissioners are Jeannie Drake, who is the Deputy General Secretary for the Communications Workers Union, President of the Trades Union Congress and an Equal Opportunities Commissioner, and Professor John Hills , who is Director of the Centre for Analysis for Social Exclusion at the London School of Economics.
The Commission would like to receive written submissions to its consultation exercise by the end of January 2005.
The Commission plans to publish its Second Report, which will include policy recommendations, in Autumn 2005.
“ Pensions Challenges and Choices” should be read and studied by other governments as the issues raised affect most Western countries.