|
|
Budget pension plans come under scrutiny
The 2010 Emergency Budget revealed a number of measures that will affect the pension system.
Chancellor George Osborne has announced plans for a swift review of the system, with a view to accelerating an initial rise in the state pension age for men to 66, which could come into force as early as 2016.
In addition, a consultation will be launched on phasing out the default retirement age. Currently an employer can refuse to employ or to continue to employ an individual once they reach the age of 65, although the employer is required by law to consider any request by an employee to stay on beyond this age.
Meanwhile, from April 2011 the Government will increase the state pension either by the increase in average earnings, or in line with prices or 2.5%, if either of these options is higher.
The Government is also removing the requirement to buy an annuity by age 75, from 2011/12. In the meantime the age by which an annuity must be bought has been raised to 77 for individuals who had not reached 75 before 22 June 2010.
Labour leader Harriet Harman has criticised the Government's stance on pensions, arguing that no funds have been put aside to pay for the decision to re-link the state pension to earnings, and that next year prices will rise faster than earnings, leaving pensioners worse off.
Meanwhile, the TUC welcomed plans to scrap the default retirement age, but warned that raising the state pension age will hit lower earners hard.
A range of consumer groups has also written to the Department for Work and Pensions, warning that implementing too broad a review of the 2012 pension proposals could threaten the consensus for a new system based on auto-enrolment.