This week the rumblings from all sides on pensions have risen to a roar. We have already reported on the CIPD’s warning that changing pension arrangements can make employees distrust their employers, and we noted the National Association of Pension Funds’ explanation of the root of the problem. Now more voices are being raised about the implications for (nearly) all of our futures.
The TUC is drawing attention to the decline of final salary pension plans, revealing that there are at least 1.8 million fewer employees in final salary occupational pension schemes than a decade ago. In 1991 there were 5.6 million employee members of occupational pensions, and using Government Actuarial projections that figure fell to 3.8 million in 2001. Only 200,000 of these are likely to have transferred to (often inferior) money purchase schemes, leaving a net loss of 1.6 million fewer people with any form of occupational pension. The real decline may be even higher given the recent acceleration in the closure of occupational pension schemes.
The TUC warns that without a statutory obligation on employers to contribute to a pension scheme, the decline will continue. General Secretary John Monks said: “Over the last decade both employers and the state have been shifting responsibility for pensions provision on to individual employees, many of whom have no idea how poor they will be when they retire or simply do not have the spare cash to make the savings needed to build up a sufficient pensions pot of their own. That is why employers must be made to contribute to pension schemes.” The TUC is calling for a programme of consumer education to make people better informed of their pension needs, and for the simplification of pension law.
The BBC today published the results of commissioned research, which suggests that people now in their twenties and thirties will have to work until they are 72 to save enough for retirement. Today has also seen an attack in the Financial Times from the government’s usual ally, the General Secretary of Amicus. Sir Ken Jackson called for an end to the tax raid on occupational pension schemes, and called for tax credits to be restored.
UNISON general secretary Dave Prentis said: “Pensions policy is in total disarray. Companies are backing out of their obligations with impunity – that cannot be allowed to happen. We believe that financial security in old age should be the right of every citizen. A cut in pension is a cut in deferred pay. The government should act as a matter of urgency and legislate to stop companies raiding pension funds by unilaterally changing the rules overnight and reducing employee benefits.”
How does HR respond to the growing fears about inadequate provision for retirement, and the discontent employees may feel as a result? Post your comments below.
