David Prosser: Turner fails on the most basic test

After weeks of leaks and counter leaks, Lord Turner of Ecchinswell had a heartfelt plea to add on Wednesday as he presented his 800-page report on the future of pensions. He pointed out that, since the report was so comprehensive, anyone who immediately rejected its findings - or accepted them for that matter - would not have had time to make a considered judgement.

Lord Turner is understandably anxious about rumours that Gordon Brown has already decided to file the Pensions Commission's report under W for wastepaper, especially since he's just spent three years working on it. But while it is quite right that we should spend some time thinking about the detail of these proposals, I believe many people will be deeply disappointed in the report as a whole.

Here's the question I believe should ultimately be used to judge the Turner Report: will its recommendations improve the lot of those people who most need help with retirement?

Our society is one of haves and have-nots when it comes to pensions, amongst both people saving for old age or pensioners who have retired.

If you're still a saver, there are all sorts of excellent private pension schemes available, and you get generous tax breaks for investing in them. The only people who can't save using these plans are those who do not have the spare cash to do so.

Similarly, there are two types of pensioner. A large group of older people are living in poverty from which they have little hope of escaping. At the same time, many pensioners are very well off - Lord Turner's report points out that, on average, pensioner incomes are higher today than at any time in the past.

For me, the most essential challenge for all pension reformers should be to help those who are not in a position to help themselves - people of working age who can't afford to save and pensioners living in poverty. Unfortunately, I believe Lord Turner has not come up with the goods for them.

In the case of pensioners, the Pensions Commission's proposals offer little more than a suggestion that the Government should immediately offer the over-75s a universal basic state pension, irrespective of the National Insurance contributions they have paid. But Lord Turner has already accepted that the Government may not be prepared to pay for this measure.

As for people retiring in future - the group that the Commission was supposed to focus on - the proposals are good news if you are not on a low income. There'll be a new low-cost pension, where your employer will be forced to top up your contributions, and you'll retain the tax breaks on offer now.

But what about those people who do not earn enough to give up 4 per cent of their pay? And what about people who take time out of the workforce to look after children or take on other carer's duties? All these people will continue to be denied access to a private pension plan.

The best Lord Turner can offer is a recommendation that the basic state pension should become more generous. The mechanics of his state pension reforms are tortuous, but the gist is that we should restore the link between the basic state pension and average earnings, while guaranteeing that everyone gets this starting income. However, the Commission accepts that means-tested benefits such as the Pension Credit will have to remain - an admission that pensioner poverty will continue.

That's why I feel let down. It's true that there are all sorts of useful ideas in the report, but almost all of them will benefit people who are already doing reasonably OK. The pension have-nots, meanwhile, will remain exactly that.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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