Global Aging Issues
Pensions in the UK: An Elusive Search for Consensus?
Opinion
April 2006
Related links
- Final Report of Lord Adair Turner's Pension Commission
- Portfolio on Pensions
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By Nigel Waterson
MP, Shadow Pensions Minister
Conservative Spokesman for Older People
Here in the UK all political parties are still digesting the implications of the final Report of Lord Adair Turner’s Pension Commission. The Labour Government is promising its definitive proposals in the wake of Turner by the “late Spring”. And we Conservatives are working hard on our own detailed response.
Meanwhile, the pensions crisis deepens.
Company pension schemes face seemingly intractable deficits. The closure of defined benefit schemes continues apace. Means-testing for state benefits on top of the state pension draws in more and more people. And some 85,000 people have lost all or a substantial part of their company pensions.
A major row has broken out because the Government has refused point-blank to follow the recommendations of the independent Parliamentary Ombudsman that compensation be paid to workers who were led to believe by official guidance that the safety of their pension contributions was “guaranteed”.
The need for long-term, sustainable pension reform has never been greater.
Turner made three major recommendations. That there should be a phased increase in the state retirement age from 65 to 68 by the year 2050; that over time the state pension should be made more generous; and that there should be established a National Pension Savings Scheme with compulsory contributions from employers and “auto-enrolment” for employees.
The Government’s initial reaction was ominous. Chancellor of the Exchequer Gordon Brown sought to undermine the Turner Report even before its publication, by suggesting its figures were wrong (even though many of them were based on the Treasury model), and its conclusions were “unaffordable”. And there seems to be a battle raging within Government – between Gordon Brown and Tony Blair – about the best way forward.
More recently, Government ministers have been talking about the need for “consensus”. We in the Opposition have offered to work with ministers to achieve a result which is right and sustainable in the long run. After all, any action – or lack of action – will have effects decades from now. And it is unthinkable for there not to be broad political and social consensus on issues like the retirement age.
So far, we have seen little to encourage us that a consensus will emerge – even within Government itself.
Our own principles are that any reform must be sustainable and affordable in the long run. We also believe that it should be fair as between different generations, between the sexes (the position of many women is indefensible) and between different groups in society (many public sector workers enjoy pension benefits which those in the private sector can only envy).
Since this Government was elected, savings in the UK have almost halved. We want to see a return to a savings culture and to achieve that we need to reverse the growth in means-testing and complexity in the state system so that people can be confident it is worth their while to save for retirement. And if the shattered confidence in pensions especially amongst young people is to be restored, we must find a way fairly to compensate those who have lost pensions through no fault of their own.