Pensions Policy Forum Response

Many people in the UK cannot afford to save for their retirement. No matter how much a politician tells us to do so, the real world is somewhat different. We live in a society where it is difficult to get on the property ladder, where private rents are too high and the supply of affordable housing is non-existent; the price of electricity and gas constantly rising, as well as the cost of getting to work by overly high petrol prices and rip-off privately owned public transport; and then there is the ever increasingly council tax. How can an ordinary man or woman against this background save for the future years? Of course it may be possible if you have relatives to help you or you own property, or indeed earn enough to save.

In addition to this, unemployment is on the rise and there is uncertainty in the public sector with constant accusations from all the main political parties saying they are over-staffed and inefficient. Confidence is low and as a result consumer spending is declining, though this in itself is not necessarily a bad thing.

Against this background is the cold reality of an ever increasingly elderly population. Therefore, in my view the following is needed:

1. State provision of pensions should be available to all, administered by the State and contributed to by the individual, company (if no pension scheme operates) and added to by taxing the higher earners more in National Insurance payments to add more pension value for the lower paid individuals. This will enable a better retirement income from those who have earned little in life.
2. Enable people to pay more into their State pension, more often through voluntary contributions, through online banking or the post office.
3. Equalise the public sector retirement age with the private sector, by making retirement age 65 for all.
4. Legislate to tax heavily second home ownership to reverse the decrease in supply by reducing the over-all value of the purchase cost of housing. This will enable more people to get onto the property ladder and out of expensive private rents and there-by release capital to save for retirement.
5. Allow councils to build council housing and not penalise them financially to do so, increasing the amount of affordable rented and shared ownership housing, enabling more people to save by not paying a premium for private rented housing. This will also decrease the private rented sector which in-turn will decrease the demand and increase the supply.
6. Safeguard private pension funds by ring fencing pension assets from the receivers when a company goes into liquidation.
7. Government policy to continue to aim for full employment and to increase the minimum wage to a level of a liveable wage.
8. Individuals should accrue pensions in their own right, with some forced saving based on tax credits and ability to pay.


Paul Bell
October 2005