23 May 2006
The TUC says that if the pensions White Paper is to produce a
sustainable new system that can command wide support it has to meet
a series of five basic tests.
TUC General Secretary Brendan Barber said: "Lord Turner's
Pension Commission provides a once in a generation opportunity to
achieve a new pensions settlement, and almost everyone appears to
accept its basic framework. We are optimistic that we can make
major progress. But it is important to get the detail right. That
is why we are setting out the tests we will apply to the White
Paper in advance."
The TUC's tests are as follows:
Test one - Will the White Paper give a clear timetable for index
linking the state retirement pension to earnings?
The TUC says it is not possible to build a stable pensions
system if a majority face reliance on means tested benefits in
retirement. People need certainty that the state will provide a
sure foundation on which they can build extra pensions through the
NPSS or their own arrangements.
Test two - Will the White Paper offer a fairer deal for women
with a clear timetable for change?
According to the TUC, the main losers from the current system
are women - large numbers of whom will not be eligible for a full
state pension when they retire. While the TUC favours moving to a
residence based universal pension, the real test is not how, but
whether there will be real help for women and on a more rapid
timescale than the rest of the package.
Test three - Will the costs of more generous pensions be fairly
shared?
Better pensions will have to be paid for. Considerable sums are
freed up by the increase in the state pension age for women to 65,
but the TUC is opposed to any further increase in the state pension
age to pay for better pensions as this will disproportionately hit
those from lower socio-economic groups who can expect to live for a
shorter time after retirement. Instead, the TUC says the white
paper should signal a review of pensions tax relief which mostly
goes to the well-off.
Test four - Will employers be required to contribute to staff
pensions?
The creation of a National Pensions Savings Scheme is a central
recommendation of the Turner Commission, but, even though many
employers do support it, the CBI has been campaigning hard against
compulsion. But the alternatives of education, encouragement and
tax incentives have all failed to replace the employer retreat from
occupational schemes. The TUC says that without compulsion, there
can be no new pensions settlement.
Test five - Will the National Pensions Savings Scheme be simple,
secure and low cost?
The TUC says that, even with employer and employee
contributions, a basic NPSS pension will not build up a generous
pension for those on typical incomes. It is therefore vital that
the costs are kept down to the 0.3 per cent recommended by the
Pensions Commission. It should also be as user friendly as possible
for both employees and employers. The TUC thinks that the scheme
architecture set out in the Turner Commission report remains much
superior to any alternative so far put forward by the pensions
industry.
