David Prosser: Pensions crisis - it isn't all bad news

In all of the arguments about the merits and failings of the White Paper on pensions reform, one truth should not be overlooked. That we even have a White Paper represents huge progress on a year ago - for that alone, Lord Turner of Ecchinswell deserves huge credit.

This time last year, it seemed inconceivable that ministers would be prepared to grasp the nettle of raising the state retirement age or, after years of refusing to countenance it, to accept the case for the restoration of the link between earnings and the basic state pension.

Lord Turner had to drag both Gordon Brown and Tony Blair kicking and screaming to the pensions reform table. There are no votes in the issue, and, if the current problems are not tackled, the ramifications will not be felt until well after both the Chancellor and the Prime Minister have left politics. So persuading them to even consider reform has been an achievement in itself.

Nor should we be too concerned that not every single recommendation made by the Pensions Commission has made its way into the White Paper.

The fact that the link between earnings and pensions will not be restored until 2012, rather than 2010, is no disaster. The Government's failure to offer all British citizens a basic state pension irrespective of the tax and national insurance they have paid is disappointing. But reducing the national insurance contributions required will help tackle the fact that less than half of all women qualify for the full basic state pension.

So, can we say that we are now close to solving the pensions crisis? Here, unfortunately, the answer is less positive: we may be nearer to a solution, but serious challenges remain.

Above all, even those who qualify for the full state pension will still only receive an income worth 30 per cent of the average wages earned by people just coming up to retirement. Add in the typical pension likely to be produced by Lord Turner's new National Pension Savings Scheme (NPSS) and you still won't be much past the 40 per cent mark.

Could you live on a pension worth just more than a third of the wages you were earning before retirement? The answer for most people is likely to be a pretty resounding no.

In other words, you will have to make additional savings in order to be sure of a decent standard of living in retirement. And therein lie two major worries still to be dealt with.

The first is that many employers will feel justified in reducing the pension benefits they offer to the minimum provided by the NPSS, in which case total pension savings will fall.

Second, we still have to tackle the current lack of trust in pensions if we are to persuade people to save. The ongoing refusal by the Government to properly compensate people who lost out when their employers went bust is a serious fly in the ointment.

n n n Whisper it quietly, but carpetbaggers are back. Kent Reliance, a medium-sized building society based in Chatham, has dropped rules requiring speculators opening accounts with it to assign any future windfall rights to charity. The society says it now welcomes applications for membership from carpetbaggers.

So should you open an account? Well, while there's no prospect of Kent Reliance staging the sort of demutualisation seen at societies such as Halifax in the Nineties (when members received windfalls worth thousands of pounds), there have already been three building society takeovers announced this year in which members have been promised smaller payouts.

Just this week, for example, Newcastle said it would take over the Universal Building Society, the members of which will now get a few hundred pounds each if they back the merger.

Kent Reliance says no deal is planned - but you never know, and £100 gets you membership rights.

Independent Partners: 10 top tips for retirement. Get your free guide here

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