Labour braced for pensions report
The Pensions Commission is expected to warn the Government today of a massive “black hole” in the pension industry finances, which may leave millions in poverty in old age.
According to findings leaked to Sunday newspapers, the Government-backed Commission will say that Britons must find an extra £57 billion a year to bring pension spending up to the European average of around 11 per cent of GDP.
The Government set up the independent body last year to assess how best to handle the thorny political issue of pension reforms.
The Commission has found a massive discrepancy between what Britons are currently saving and what they should save for retirement.
The Government had previously admitted to a £27 billion shortfall.
At twice the figure, the Commission, in its long-awaited report, will warm millions of Britons face poverty in old age without major reforms to the pensions industry.
The Commission, headed by former CBI chief Adair Turner, will warn Britons are simply not saving enough for old age and will suggest tax increases and compulsory contributions as possible ways to raise pension contributions, a view unlikely to curry much favour in the Treasury.
Pension Minister Alan Johnson has acknowledged the severity of the problem.
If the figures hold true, Britain’s “head-in-the-sand” culture could leave 13 million workers short of sufficient sums of money for their retirement, he said on Sunday.
On the eve of the report, Tony Blair said one of the problems facing pensioners in Britain was the steady lowering of the retirement age.
Mr Blair said people should not be “written off” at the age of 65.
“We must change the culture that can write people off at 65, if not 60 or 55, whether they want to work or not,” he said
Kay Carberry, assistant general secretary of the Trade Union Congress, is keen to hear the case for compulsory payments.
The TUC wants compulsory contributions to stand at 15 per cent of salary.
Ms Carberry said last night: “It is very plain that the voluntary system we have got is just not working. We are all not saving enough. Our employers, by and large are not contributing enough to our pensions and the basic state pension is too low, and over reliant on means testing.
“Compulsion can work. In Australia it was phased in over 12 years, gradually the amount was increased and we have seen that there is a very high level of acceptance amongst Australians for their system.”
Rodney Bickerstaffe, head of the National Pensioners Convention, said pensioners could not wait too long for action to be taken. “The fact is that they are going to eradicate child poverty within 20 years, we hope, but today’s older people can’t wait 20 years.
“We do want bold decisions. They can’t just take them at the drop of a hat, but I do hope they are not going to wait another decade.”
The Conservatives’ work and pensions spokesman, David Willetts, yesterday reiterated his call for the scrapping of the means-tested pension credit, which he argues removes the incentive for people to save.
