Review of the year: Pensions

Be ready to work at 70

This was meant to be the year the Government finally solved Britain's pension crisis. Lord Turner of Ecchinswell's three-year inquiry into the demographic time-bomb delivered its interim report in 2004. But the former CBI director general reserved judgement on specific reforms until its final report in November.

The problem is a knotty one. People are living longer, swelling the number of pensioners in society. As the baby-boom generation retires over the next 20 years, the number of working people compared to pensioners will fall sharply, from 2.7 to 1 today to 1.1 to 1 by 2050. Fewer working people paying tax to support a growing number of pensioners will place an increasing strain on the public finances, as the state pension bill grows.

The Pensions Commission's brief - to propose affordable reforms to prevent workers facing poverty in retirement - was always tough. But Lord Turner had not banked on the additional political challenge of getting Gordon Brown on side.

Early leaks of Lord Turner's report suggested he was determined to suggest some politically uncomfortable ideas, including a gradual rise in the state pension age - a year each decade between 2020 and 2050, to 68 or 69. The Commission would also press for more generous state benefits. Finally, Lord Turner would suggest a new national pension scheme into which employees would automatically be enrolled and to which employers would have to contribute 3 per cent of workers' pay.

The Chancellor's views were made clear even before the report was officially published. A leaked letter from Brown to Lord Turner warned that the Treasury disagreed with the Commission's costings of its proposals - they would actually be much more expensive, the Chancellor warned.

Despite the frosty reception, Lord Turner stuck to his guns, confirming the Commission's findings at the end of November. Publicly, the Government welcomed the report, and Brown called for a "national debate" on pensions reform. Privately, the Treasury maintained that the proposals would be unaffordable.

Will 2006 be the year in which a consensus on pensions reform finally emerges? Don't bet on it.

John Hutton, Secretary of State at the Department for Work and Pensions, will deliver a White Paper on reform in the spring. But the Chancellor has his own agenda; Brown believes in the means-tested Pensions Credit, rather than a more generous basic state pension. And he is sceptical about spending more today on a problem so long-term that it may not become a real issue on his watch, whether he's at the Treasury or at Number 10.

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

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Guru Careers: Graduate Editor / Editorial Assistant

    £16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Day In a Page

    Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

    Please save my husband

    As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada
    Birthplace of Arab Spring in turmoil as angry Tunisians stage massive sit-in over lack of development

    They shall not be moved: jobless protesters bring Tunisia to a halt

    A former North African boom town is wasting away while its unemployed citizens stick steadfastly to their sit-in
    David Hasselhoff's new show 'Hoff the Record': What's it like working with a superstar?

    Hanging with the Hoff

    Working with David Hasselhoff on his new TV series was an education for Ella Smith
    Can Dubai's Design District 'hipster village' attract the right type of goatee-wearing individualist?

    Hipsters of Arabia

    Can Dubai’s ‘creative village’ attract the right type of goatee-wearing individualist?
    The cult of Roger Federer: What is it that inspires such obsessive devotion?

    The cult of Roger Federer

    What is it that inspires such obsessive devotion?
    Kuala Lumpur's street food: Not a 'scene', more a way of life

    Malaysian munchies

    With new flights, the amazing street food of Kuala Lumpur just got more accessible
    10 best festival beauty

    Mud guards: 10 best festival beauty

    Whether you're off to the Isle of Wight, Glastonbury or a local music event, we've found the products to help you
    Unai Emery’s passion for winning and eye for a bargain keep Seville centre stage in Europe

    A Different League

    Unai Emery’s passion for winning and eye for a bargain keep Seville centre stage in Europe, says Pete Jenson
    Amir Khan and James DeGale’s remarkable Olympic performances were just the start of an extraordinary journey - Steve Bunce

    Steve Bunce on Boxing

    Amir Khan and James DeGale’s remarkable Olympic performances were just the start of an extraordinary journey
    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf