The demographics catching up with them!
Will the pension funds start becoming more riskier? I remember reading pension funds in the US are moving about USD 3bn to the hedge funds claiming that they produce better returns with lower risk (I will never understand this, will I?)
More thoughts on this later...
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Turner report calls for rise in pension age to 68
By FT reporters
Published: November 29 2005 21:52 | Last updated: November 30 2005 11:38
Lord Adair Turner published his eagerly-awaited recommendations for British pension reform on Wednesday which included restoring the link to earnings, increasing the state retirement age from 65 up to 68, and the establishment of a pensions savings scheme.
Key points of the report
• 5 per cent automatic contribution from employees
• 3 per cent compulsory contributions from employers
• Voluntary top ups allowed
• Employees automatically enrolled but can opt out
• Gradual increase in pension age up to 68 by 2050
• National pensions savings scheme
Lord Turner said his aim was to stimulate a rational debate by recommending “policies which over time will make state pension provision more generous and less means-tested but with the state pension age rising gradually as life expectancy increases.”
“The trade-off must reflect a point of view on equity between generations on the economic impact of increased taxes and on the importance of pensions relative to other public expenditure priorities,” Lord Turner added.
TUC chief Brendan Barber called the report bold and hard headed. He said: “It sets politicians - and all of us involved in the pensions debate - a real challenge to create the consensus needed to implement its radical agenda. ”
The savings industry made clear it wants as big a share as possible of the increased pensions investment to flow through private schemes.
Stephen Haddrill, director general, said: “The ABI supports automatic enrolment into pension schemes, with a matching employer contribution where the employee does not opt out. But we don’t need to create a new, expensive and risky state quango; we should use the expertise and infrastructure of our existing private sector to put this vision into effect. Doing so will give Britain a head start.”
Tony Blair paved the way for the landmark report by backing its central recommendation that the UK should move to a more generous earnings-linked basic state pension.
The prime minister – who was given a copy of the study earlier this month – on Tuesday declared that “the basic construct of Turner is right”.
Although Gordon Brown, the chancellor, is concerned that state pension increases in line with earnings would entail big tax rises, Mr Blair said Britain “needs a system that enshrines a decent basic state pension, funded by the taxpayer.”
In a sign that the government will try to forge a firm policy next year, Mr Blair promised in advance that he would respond to the Turner report with “comprehensive, detailed proposals” in the spring.
Downing Street and the Treasury are playing down suggestions that the report will trigger off new tensions.
http://news.ft.com/cms/s/0368bf62-6121-11da-9b07-0000779e2340,_i_rssPage=7eb2a08a-cbe5-11d7-81c6-0820abe49a01.html
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