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John Hutton MP the Pensions Minister has said that he wants to restore the link between pensions and earnings rather than the retail prices index as it is at the moment. However, there will be a price to pay for the restoration of the link to earnings and that is an increase in the age at which people will be able to retire and draw a state pension.
He has commented on the number of people who do not save enough for their retirement and it is estimated that around 10 million people are not saving enough for their retirement.
The White Paper on Pensions is expect out this week and most of the planned changes will probably be based around Lord Turner's report on Pensions.
It is expected that a National Pensions Saving Scheme will be adopted. If it is anything like the much trumpeted Stakeholder Pensions Scheme then we fear it will be doomed to a similar fate. The Insurance Industry does not want the stakeholder scheme as it can't make any money from it and administration is burdensome.
Small firms could be adversely affected if proposals are brought in to make employee and Employer contributions compulsory. Firstly, those on low incomes struggle to save now, so how they will manage to put money into a pension is beyond me. And Secondly, Very small firms can often be working hand to mouth with cash flow and any forced contribution to company pension schemes for their employees could either see these small firms close or start reducing the number of employees they have.
This government and all the other parties appear still to be in cloud cuckoo land on pensions.
There has also been much hype that the new system will be a boon for those who care for the sick or elderly full time. Again they will be allowed a pension scheme, but what I know of the income bracket of many of these people who save the country millions of pounds a week, it is unlikely that many of them will be able to afford a contribution.
When will Westminster realise that those below the bread line on benefits simply cannot afford to save or contribute to pensions.
The irony of it all is that our Members of Parliament have one of the best non contributory pension schemes on the market.
Which side is your bread buttered minister?
We await your proposals with interest but won't hold our breath for anything constructive or useful, especially on past performance of any colour of government where pensions and benefits are concerned.
