The
CBI today (Tuesday) described the Government’s Green Paper as "a useful first building block"
for stabilising the pensions system.
John
Cridland, deputy director-general, praised proposals for simplifying pensions
and said employers would be pleased about the streamlining of tax
incentives.
On
the new tax incentives, he said: "This looks promising. We must give more encouragement for
employers to provide pensions and for employees to contribute. The Government must grasp the nettle on this
or risk failing to plug the savings gap."
On
pension simplification, he said: "The Government has taken a swipe at the
red tape that makes pensions so complicated. That will help more firms offer
schemes."
On
flexible retirement rules, he said: "It is right to call time on these
absurd rules, which discourage people from working longer. Until now, people
have been unable to receive a partial pension while working for the same employer,
forcing many to seek work elsewhere.
"Firms
will also be pleased that the Government is not increasing the state retirement
age, but will look with care at proposals for ending compulsory retirement.
Companies often want people to work past 65, but these arrangements must be in
the interests of both employer and employee.
"Let
us be clear that firms want to consult staff fully before making changes to
pensions. We will take a constructive
look at these proposals to ensure they do not hinder prudent and necessary
actions."
The
main points of the pensions green paper:
–
The Government must address the problem caused by the increase in the number of
people expected to live beyond retirement age
–
The Government is sceptical about compulsion because individuals are best
placed to judge their own needs
–
People must save more or work more. At
present three million middle class people are not saving enough money.
–
Linking the state pension to earnings would not be sustainable in the long-term
–
The Government also rejects plans to scrap means-tested benefits and add them
to the basic state pension because it would take money away from the poorest
pensioners.
–
State retirement age will not be raised
–
People who defer their state pension to
70 may be able to get a lump sum of £20,000 on top of their normal pension,
£30,000 for a couple.
Occupational
pensions
–
New pensions regulator to be created, focusing on schemes with a high risk of
fraud or maladministration.
–
Main Pickering recommendations accepted, including simplifying occupational
pensions and abolishing the Minimum Funding Requirement.
–
Single tax regime for pensions to be introduced.
–
Employers can make membership in a pension scheme a condition of employment.
–
Compulsory retirement age to be scrapped.
–
Public service retirement age to be raised to 65 for new entrants.
–
People will be allowed to work after receiving their occupational pension.
–
Individuals would be able to contribute up to £200,000 per year to their
pension scheme, and a lifetime limit of £1.4m.
–
The tax free lump sum would remain.
Other
issues
–
Sandler recommendations on the simplification of savings will be accepted.
–
Age discrimination legislation to be introduced.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
–
Independent pension commission headed by Adair Turner, former Director General
of the CBI, to examine whether there is a case for moving beyond voluntarism to
compulsory pensions
