Queen's Speech: Two steps forward, one step back for pensions

 

Personal finance editor

Pensions formed the centre point of yesterday’s Queen’s Speech as the Monarch laid out the coalition’s plans for its final year of government.

There were no surprises, just confirmation of previously-flagged proposals. Chief among these was the news that, as trailed heavily by the Pensions Minister at the weekend, the Government will launch new Dutch-style pensions, known as collective defined contribution (CDC) schemes.

The move would allow thousands of people to pay into the same retirement scheme and, in theory at least, share the risk. But critics were quick to slam the proposal, especially as it was published alongside full details of Budget proposals to make retirement saving more flexible.

The Speech firmed up details of a bill which will implement the annuity reforms to allow people to draw their retirement income in one go if they choose.

Kate Smith, of Dutch-owned pension company Aegon UK, said: “This is a case of two steps forward one step back for pension reform. The Budget has given individuals more flexibility about how they take their pension but under the Dutch CDC model there are no such flexibilities.”

“The two pensions bills announced today pull in opposite directions,” said TUC General Secretary Frances O’Grady. “The pooling and risk sharing in Dutch-style not-for-profit pensions offer a better and more predictable retirement income but the Chancellor’s ill-thought through Budget proposals take the collective out of pensions and turn them into individual savings pots.”

Meanwhile pension experts were critical of the concept of the so-called Dutch pensions. Dean Mirfin of Key Retirement Solution said: “The risk of so-called CDCs is that people have to surrender flexibility and freedom. It is true that the principle of wider pooling holds a lot of merit but in practice in a world of pension freedom and flexibility, shouldn’t people be in control of their own fund?”

Rob Palmer of employee benefits consultancy Quantum Advisory went further. “This is far from the silver bullet to solve the nation’s pension problems, it is potentially the germination of the next mis-selling scandal,” he warned.

That’s because the overall economies of scale will provide some protection for all, but there will be a sizeable minority that will always be able to claim they are worse off, he said. “This will inevitably lead to claims for recompense and a further undermining of our pension system.”

Business leaders had a mixed reaction to the 11 bills announced in the speech, including a Small Business, Enterprise and Employment Bill.

Anthony Browne, chief executive of the British Bankers Association welcomed the bill. “It’s great to see a Bill devoted entirely to supporting smaller businesses. This could give a shot in the arm for entrepreneurs up and down the land,” he said.

Simon Walker, director general of the Institute of Directors, said the bill “will deliver necessary and overdue reforms”, including a crackdown on exclusivity clauses in zero-hours contracts.

“Abuses of zero hours contracts must be stamped out,” He said. “The value of these contracts is in their flexibility, and it makes no sense at all to restrict an individual’s right to find work elsewhere.”

Katja Hall, CBI deputy director-general added: ““A ban on exclusivity clauses in zero hours contracts would be a proportionate response to some of the issues that have been highlighted, as it focuses on poor practice rather than demonising flexible work in general.”

News
news

Emergency call 'started off dumb, but got pretty serious'

News
people

Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'

Arts and Entertainment
JK Rowling is releasing a new Harry Potter story about Dolores Umbridge
arts + entsJK Rowling to publish new story set in wizard's world for Halloween
News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
people

Thought you'd seen it all after the Jeremy Paxman interview?

PROMOTED VIDEO
Arts and Entertainment
On The Apprentice, “serious” left the room many moons ago and yet still we watch
tv

Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent

Life and Style
tech

Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into conflicts
Arts and Entertainment
A scene from David Ayer's 'Fury'
film

"History is violent," says the US Army tank commander Don "Wardaddy" Collier

News
The Edge and his wife, Morleigh Steinberg, at the Academy Awards in 2014
peopleGuitarist faces protests over plan to build mansions in Malibu
Sport
Luis Suarez and Lionel Messi during Barcelona training in August
football

Striker's four-month ban for biting an opponent expires on Friday

News
news
News
ebooksAn unforgettable anthology of contemporary reportage
News
peopleFox presenter gives her less than favourable view of women in politics
News
George Clooney and Amal Alamuddin married in Venice yesterday
peopleAmal and George Clooney 'planning third celebration in England'
Property
One bedroom terraced house for sale, Richmond Avenue, Islington, London N1. On with Winkworths for £275,000.
property
Sport
Erik Lamela celebrates his goal
football

Argentinian scored 'rabona' wonder goal for Tottenham in Europa League – see it here

News
i100
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.

iJobs Job Widget
iJobs Money & Business

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

CTO / Chief Technology Officer

£100 - 125k: Guru Careers: A CTO / Chief Technology Officer is needed to join ...

COO / Chief Operating Officer

Competitive (DOE): Guru Careers: A COO / Chief Operating Officer is needed to ...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker