There were several items recently of pension interest, one was the suggestion that to encourage self provision, pension scheme members should be entered into a lottery with a million pound prize. This appears to make pensions more of a gamble than they are at present, and to take even more money out of pension funds.
The aim should be to make pension savings more affordable and secure, that is reducing contributions, all charges and defining and improving benefits.
Another was the announcement of strike ballot action in the Public Sector, which may improve publicity, but is difficult to enact and can lose public support. Will a nurse leave a dying patient, or a teacher lock out children from schools, this would only alienate public support.
The modern approach using internet and post could be more effective, if all 5.4 million PS workers E-mailed their MP’s, DWP, the Ministers and the Prime Minister; contacted the social network sites and the media or wrote and telephoned them the effect would be dramatic.
If organised on a given day, as a day of action, the effect would be overwhelming; websites would crash and the State system could be brought to a standstill. Someone would have to take note and listen.
More has come to light on the proposed changes to State pension; existing pensioners would be unaffected, the £140 per week will still be based on contribution records and welfare benefits unchanged for non contributors, but denied to those on full pension.
Effectively this means that the State pension will be brought up to the Pension Credit minimum poverty level, but without any extras of welfare benefits. There is also the suggestion that the State second pension and SERPs rebate will be phased out.
This again raises the question of what are NI contributions for and are they just a welfare tax. In pensions as in work, you are worse off after earning a living. There needs to be a clear separation from welfare and the rewards of work, the purpose of NI needs to be clearly defined in financial terms.
Tax and NI thresholds together with basic pension are now clearly set at the defined poverty level of £140 pw, the minimum the State says a single person needs to live on. The advantages of work should progress from that and be apparent, with welfare clearly defined for both non and low earners.
All pension payments whether State NI, Public Sector or private should give good value for money, a guaranteed result above poverty levels and benefits proportional to contributions paid.
The new basic State pension level is 28% of the National average wage; in a funded scheme this should require contributions of 8% over 40 years with modest growth of 4%. NI contributions, all spent on the retired, are now 25.8% which should yield a pension of some 90% of average wage in real terms.
Teachers, NHS, police and fire have total contributions of 19% which should give 66% and not the current miserable level of 25 to 30%. The 3% increases being implemented brings employee and SERPs levels up to massive 14.6%, which alone should give 51% before NI.
The majority of schemes give poor value for money, mainly due to the undervalued annuity rates and high charges, levies and dividend taxation. It is time for drastic changes or a new system of pension provision, this will only occur from individual customer pressure and action.
Savings Annuities Public Sector NHS Teachers Police Local Government Hutton State Savings Annuities Public Sector NHS Teachers Police Local Government Hutton State
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