Partnership in Pensions? Responses to the Pensions Green Paper

The government’s pensions Green Paper – A new contract for welfare:partnership in pensions – proposes fundamental changes to the UK’sretirement income system. Members of CASE and of the Department ofSocial Policy at LSE have looked at the likely implications of the reformsfor pensioner poverty, income security in old age, economic growth, theNational Insurance system, tax reliefs, and women. Agulnik’s analysis ofthe redistributive effects of the State Second Pension (SSP) shows that itwill result in much better benefits for low earners than would have beenthe case under SERPS. However, financing this improved provisionthrough National Insurance Contributions will mean that the burden ofpaying for the new scheme will be heaviest for those close to the upperearnings limit. Barr questions the macro-economic advantages ofincreasing the amount of funded pension provision via Stakeholderpensions. He finds there is no particular reason to favour the proposedbalance of 60% private pension provision to 40% public provision oversome other ratio. He also finds that Stakeholder pensions will not offercontributors complete income security in retirement due to uncertaintiesabout investment returns, annuity rates and future inflation. Falkinghamand Rake argue that the Government’s proposals have failed toincorporate fully the needs of women. Women will be underrepresentedamongst Stakeholder pensioners, and the exclusion of verylow earners and carers with children over 5 from eligibility for the SSPwill adversely affect women. Agulnik then looks at the proposed taxrelief rules for Stakeholder pensions. While there are good reasons forthe proposed £3,600 limit to tax relief on contributions, the retention ofthe existing rules for personal and occupational schemes is anomalous.[...]