Budget: ‘government is leaving retirement to chance’

Posted on 28/03/2014 by

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‘Pensions ‘fiddle’ proves government is leaving retirement to chance

Britain’s biggest pensioners’ organisation The National Pensioners Convention (NPC) say pension changes in the recent Budget will simply store up bigger problems for later. The group adds that the private pensions industry might ‘make a killing’ but changes proposed by the Chancellor do not address the underlying problems of funding an adequate income in retirement.

The NPC’s main objective is to promote the welfare and interests of all pensioners, as a way of securing dignity, respect and financial security in retirement, and the organisation believes that the Chancellor’s real intention is to place further responsibility for retirement onto individuals and the market, rather than seeing it as a role for the government. The campaigning group adds that welfare caps, pensioner bonds and changes to pensions prove government ‘is leaving retirement to chance’.

Dot Gibson, NPC general secretary said: “Pensioners will be concerned that benefits such as the winter fuel allowance, cold weather payments and the Christmas Bonus have all been placed into the welfare cap, which could lead to cuts in the future, at a time when fuel bills in particular are continuing to rise. The announcements regarding a new Pensioner Bond and changes to ISAs were also rather rose-tinted. 55 per cent of all pensioners receive less than £10 from their savings and 29 per cent of older couples have less than £1500 put aside.

“The idea that older people therefore have huge amounts of money to invest is rather optimistic, but the most serious change was related to defined contribution pensions. These reveal that more has to be done to improve the prospects for future pensioners. The state pension is one of the worst in Europe and the high water mark of decent company pensions has long gone.”

She went on: “However, allowing people to take all their pension pot doesn’t make the pot any bigger and belies the fact that the average worker will have a pension pot of little more than £30,000 to cover all of their retirement. Enabling people to take their pensions from aged 55 also shows the chancellor has realised there is a huge problem coming down the line which has to be funded. His plans to raise the state pension age to 68 will create an army of older workers, who if lose their jobs in their late fifties will be unable to find work. The only way they will have to fund this period of limbo until they reach retirement age will be to use their pensions – which might solve the problem in the short-term but will store up bigger problems later on when their money starts to run out.

“Once again it’s a pensions’ fiddle and those left to carry the burden will be some of the lowest paid workers.

“The reality is money purchase defined contribution pension schemes are simply not the answer to funding a decent income in retirement. The private pensions industry might make a killing from the schemes but most workers end up with much less than they thought.”

For further information about the National Pensioners Convention visit http://www.npcuk.org or email npc.scotland@yahoo.co.uk

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