Well, I really don’t know where to start this week. Retirement ages to go up to 66 from 2016 – an accelerated rate but perhaps not before time. Default retirement age is to go – this was well trailed and was a neccesity if State Pension Ages are rising. But there is a downside to this of course. And that is – just where are the jobs going to come a) for the over 50s who are already struggling to find jobs in the current market and b) for the younger generation who might find their job opportunties blocked by encumbent older workers who won’t (or can’t) retire?
There is no simple answer to this particular dilemma except perhaps to ensure that we all start saving earlier for our pensions which will allow us to take that ‘early retirement’ option. But it may not be possible for many. And then there’s the manual workforce who may well feel that working on beyond their bodily ‘use by’ date is problematical. Not easy is it?
Next a slightly sneaky announcement from the Government. Many of us are familiar with pensions in payment or in deferment rising each year by the Retail Price Index or RPI. Well, hidden in the small print is a change to State Pension increases meaning that instead State pensions will rise by earnings or 2.5% or using the Consumer Price Index or CPI, whichever is the greater . So what, you might think? Well simply this. CPI is usually a couple of percentage points lower than RPI. So by using this index the Government might save itself a bit. Employers and Trustees might wish to consider amending their schemes (which usually use the RPI measure) to take advantage of that soon.
Restoring the link to Earnings – another well trailed change – may sound good (and in times of wage inflation is very good) but two caveats here. First, earnings are not rising particularly fast at the moment and secondly, since the change is in no way going to be backdated, there will be a lot of catching up to do before we get back to where we should have been had the link not been broken in the first place!! Oh well, there’s always the World Cup to cheer us all up and at least we not striking over pensions like the French…yet!
Jennie advises large multi-employer schemes as well as smaller single employer arrangements and has wide experience of both Defined Contribution and Defined Benefit schemes. Jennie qualified in 1986 originally as a criminal prosecutor. She sits as a Magistrate in her local justice area and is an Approved Chairman and Deputy Chair of the Bench Training and Development Committee. Jennie was formerly Legal Director of the Occupational Pensions Regulatory Authority. When her busy practice allows, Jennie likes to indulge her passion for travelling. To consult Jennie on any corporate Pensions matter, please call her on +44 (0)20 7749 2700 or send her an email by clicking below:
[...] This post was mentioned on Twitter by Silverman Sherliker and Stefan Arestis, Jennie Kreser. Jennie Kreser said: New blog post: At least we're not French… http://www.pensionlawyerblog.com/pensions-budget [...]
[...] on the story can be found at: http://news.bbc.co.uk/1/mobile/business/10557675.stm and in Jennie Kreser’s recent blog regarding changes to the State [...]