David Prosser: Pensions - the impossible dream
Saturday 26 November 2005
In just four days' time, Adair Turner will deliver the final report of the Pensions Commission - his long-awaited verdict on how Britain's pensions crisis might best be solved. But while the Turner Report is an important piece of work, in that it could frame the shape of the UK's pensions system for the next 30 years, its publication on Wednesday is bound to be something of an anticlimax. We know what it will say and if the stories which emerged this week are true, we know how the Government will act - by ignoring it.
The Commission's interim report, published last year, spelled out the choices we now face: to work longer, save more, pay more tax, or accept a lower standard of living in retirement.
Next week, Turner will explain what these choices mean in practice, and what policies we must adopt to cope. But the trouble with these grand visions is that they assume everyone fits into the same picture. And the reality of pension reform is that the "national consensus" on pensions, famously sought by the former pensions minister David Blunkett, is an impossible dream.
In any system, there are winners and losers. Currently, for instance, those who do not have sufficient income to make very significant private pension savings lose out. The state safety net - comprising the basic state pension and the pension credit - does not deliver a generous standard of living. But make modest contributions to a private plan and you'll do yourself out of pension credit altogether.
Any new blueprint for pension reform, such as the Turner Report, is bound to create similar injustices. For instance, while white-collar workers doing jobs that are not physically demanding may be happy to work on beyond age 65, that's not true of blue- collar staff, who may struggle to find employment in their sixties.
These issues are so difficult that a Government fudge was always inevitable. John Hutton, the cabinet minister now in charge of pensions following the untimely departure of Blunkett earlier this month, has followed his predecessor's example by calling for a national debate on pensions - it's a tediously obvious delaying tactic.
The problem for Hutton is that while many voters have, in fact, made it clear what they want, he does not have the power to deliver or the nerve to say no.
For starters, people want a higher state pension - perhaps a citizen's pension that would pay a decent level of income to all pensioners, irrespective of the National Insurance contributions they have made. They also want their employers to do more. But above all, people want an end to all these reports and national debates.
The row which threatens to blow up if the Chancellor bins Lord Turner's reportmay well run on for many years to come. This Government has been in power for eight years, yet it has, so far, been unable to forge the consensus on pensions to which it keeps loftily aspiring. Don't expect anything to change after Wednesday.
* My plea two months ago to parents with unspent child trust fund vouchers seems to have fallen on deaf ears. Take-up of the scheme - in which children born since 1 September 2002 get cash from the Government to invest - fell to its lowest level last month, according to the Building Societies Association.
Forgive my lack of originality, but I'm making the same plea again today. If you're one of the million or so households that has so far failed to invest the child trust fund vouchers you have received, for heaven's sake, get your act together. It is free money and your children are missing out.
Where should I invest my savings?
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