Pensions shake-up may end index link.
THE link between retirement income and inflation was under threat last night following controversial reforms proposed in a pensions review.
The Pickering Review of pensions called for companies to have more control over their schemes, including allowing them to abolish index-linked pensions and benefits for surviving partners.
It also said employers should be allowed to make it compulsory for staff to join their pension fund, and people should be allowed to continue working beyond the current retirement age of 65 if they choose to.
The Government said its response to the proposals would be ``bold and radical'', and it plans to publish a Green Paper in the autumn making far-reaching changes to pension policy to help people save more.
But consumer groups and unions responded angrily to the review, headed by Alan Pickering, with Amicus slamming the report as a ``sell-out of millions of workers'', and the GMB saying it would consign people to poverty during old age. Roger Lyons, general secretary at Amicus, said: ``Removing the obligation on employers to increase pension benefits with prices would inevitably lead to pensioner poverty in the long-term and removing survivor benefits would be a disaster for practically every couple in the country. The report is a cop-out that shifts the cost of the crisis from the perpetrators to the victims. Fat cat company directors will be rubbing their hands with glee.''
John Edmonds, general secretary of union GMB, said: ``We could be looking at the biggest pension rip-off in history.
``This report consigns hardworking people to an old age of increasing poverty.''
And Gordon Lishman, director general of Age Concern, said if pensions no longer had to be indexed in line with inflation it could have a devastating effect on people as they grew older.
He said: ``Older women are most likely to be struggling on low incomes in retirement. If there were moves to alter the payment of survivors' benefits this would be likely to make the struggle for many women even harder.''
Other recommendations put forward in the review included a burning of the red tape surrounding pensions, and the introduction of proportionate regulation which worked with existing laws and not in isolation.
Mr Pickering, former chairman of the National Association of Pension Funds, said he wanted all the private pensions regulation currently on the statute book to be scrapped and replaced with a new Pensions Act. Thre should also be a reduction in the number of schemes available from around 20 to three.
PICKERING'S PROPOSALSRegulation L A new Pensions Act to consolidate all existing pensions legislation.
L Making the pensions framework much simpler, including a ``burning'' of red tape and new proportionate regulation which is more proactive and focused.
L This would lead to a reduction in the number of pensions available from around 20 to a maximum of three.
Occupational schemes L More freedom for employers to design their own pension schemes without Parliament and politicians trying to ``micro-manage'' the private sector.
L Employers and employees should be able to decide the make-up of their pension but staff should have a legitimate right todemand that companiesdeliver on their promises. L Companies could make it compulsory for staff to join their pension schemes if they wished to. L An end to the requirement that pension schemes must be index-linked and provide benefits for a surviving partner.
L Employers should begin accruing benefits from day one, rather than having to wait until they have been at a firm for two years before they can keep the firm's contributions if they change employer.
L New rules to make it easier to transfer benefits between schemes.Private pensions L More freedom in the marketplace for pension providers to sell ``appropriate pension products to appropriate consumers''.
Consumers L Retirement should become more flexible, enabling people to continue working after 65 if they wish.
FEARS: Many people approaching old age now fear they will spend their declining years in poverty; CHANGES: Alan Pickering
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|Publication:||Daily Post (Liverpool, England)|
|Date:||Jul 12, 2002|
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