Pensions and saving

Doing a lot on pensions last week and this with a number of presentations about our pensions campaign. A lot of anger from members outraged about the undermining of their occupational pension scheme.

Today we have the UK Government announcing plans for a simpler state pension of about £140 a week in today’s money in what Steve Webb, the UK pensions minister, described as “the biggest shake-up of the state pension system for generations”. The single pension would be set just above the means-tested pension credit of £137.35, allegedly making it clear that it pays to save for old age. “We have to send out a clear message that you will be better off in retirement if you save,” Mr Webb said.

Well that's not how it looks if you are currently paying into a public service pension scheme. They no longer trust the Government on pensions after unilaterally switching the indexing of benefits from the RPI to the CPI - a move that will cut average benefits by at least 15%. You pay into a scheme all your life and then get the benefits cut. That's just robbery and fatally undermines confidence in saving.

But the biggest impact on pensions and saving will come from the proposed 3.2% increase in contributions. For low paid workers in particular this is simply unaffordable when you are facing a pay freeze and attacks on other terms and conditions. We already have a growing number of staff opting out of pension provision and this will rapidly increase if this plan is implemented.

So not for the first time it would appear that the left hand of government doesn't know what the right hand is doing. Or if you like a good conspiracy - maybe they do!