New flat-rate state pension plans unveiled

Plans for a new flat-rate state pension and a system to automatically raise the pension age have been published.

Plans for a new flat-rate state pension and a system to automatically raise the pension age have been published.

Under government proposals the existing means-tested arrangements would be replaced for new, but not existing, pensioners.The current full state pension is £97.65 a week, but can be topped up to £132.60 with pension credit.

This could be replaced by a new £140 flat rate, with inflation expected to push this up to £155 by 2015 or 2016.

A second, less radical option would see a set amount of state second pension paid for each qualifying year of National Insurance contributions.

No set date for implementation has been revealed.

Simplification

The plans are aimed at simplifying the system, and encouraging people to save for their retirement by knowing exactly what they would get from the state.

“Tomorrow’s pensioners do face a very different world,” said Pensions Minister Steve Webb.

“They will, on average, be working for a lot longer, they will be retired for longer, they will not on the whole have final salary guaranteed pensions in the way that perhaps their parents did.

“We therefore need a simpler, clearer foundation because more of them will now be asked to save for their retirement.”

Work and Pensions Secretary Iain Duncan Smith said: “We have to send out a clear message across both the welfare and pension system: you will be better off in work than on benefits and you will be better off in retirement if you save.”

The state pension age will rise to 66 for both men and women by 2020.

The government’s proposals suggest that this should continue to rise automatically in line with longevity.

This could be done either through a formula linking pension age to average life expenctancy, or through a regular official review.

Changes

Under current arrangements, a minimum income guarantee ensures couples get £202.40 a week through the means-tested pensions credit. 

A green paper opens consultation on a new simplified state pension that would end the means-tested element of the state pension.Two options are suggested. One is a universal £140-a-week payment to anyone who has 30 years of National Insurance contributions.

The second would bring forward plans to replace the second state pension with a payment of £1.60 for each qualifying year. So, somebody with 30 years of contributions would receive £97 in basic state pension and £48 in state second pension, making a total of £145 a week.

Caring for a young child or an elderly dependant would count as a qualifying year, in the same way as a year in employment. 

But it is the option of a universal flat-rate payment that would be the biggest overhaul of the system for decades. 

Some of the key points will include: 

• The flat-rate pension will only be available for new pensioners reaching state pension age, rather than the millions of existing pensioners
• The basic state pension will rise each year in line with average earnings, the Consumer Prices Index measure of inflation, or 2.5%; whichever is the greater
• The state second pension will be abolished, but the government would honour contributions that had already been made ahead of the change
• At least 30 qualifying years of National Insurance contributions will be required for the full state pension. A minimum level of seven years will be set, under which no state pension will be paid.

The proposals, if given the go-ahead, could create a two-tier system of state pension for some time. 

Existing pensioners, when the system changed, would still gain their entitlement under the old system, but those who reach pension age after the changes come in would get the new flat rate. 

So, as a result, a 76-year-old could get a different amount to a 66-year-old after the changes come in. 

“I want to make it clear there is no extra cash for new pensioners,” Mr Webb told the BBC News website. 

A date could be set, so those who reach pension age the day before the changes would spend their retirement years under the old system, whereas somebody who hits their pension age birthday the day after the changes would receive their pension under the new system.

Key issues

This plan would also bring “contracting out” arrangements to an end, where some people pay lower National Insurance contributions because their second state pension is contracted out to their company final-salary pension scheme.

As a result, these people’s National Insurance bill would rise, but their state pension would also be greater. The extra cost to employers could also push more to close their final-salary schemes.

Joanne Segars, of the National Association of Pension Funds, said: “The end of contracting out by defined benefit pension schemes is an inevitable part of simplification.

“But the government must make an early promise that it will make it simpler for schemes to contract back in. It must not load extra costs and red tape on these pension schemes, which are under severe pressure.”

More than one-and-a-half million eligible pensioners do not claim pension credit, and the government believes that such individual losses of entitlement would not occur under a simpler flat-rate system.

The self-employed, and some women, are also likely to benefit, as National Insurance rules have meant they have tended to get a lower state pension.

However, there is likely to be debate about the fairness of a flat rate that makes no distinction between poor and wealthy pensioners.

Rachel Reeves, the shadow pensions minister, said: “A pension system that would deliver £155 for everyone is a welcome step, and we will look carefully at the details of the government’s announcement, especially the effect on women’s retirement income.”

But she added that the state pension age was rising faster than planned for hundreds of thousands of women.

“While we welcome proposals which could help future pensioners, we urge the government to rethink on help for today’s pensioners and for the people hit hardest by increasing the state pension age by up to two years,” she said.

Source: BBC News website: http://www.bbc.co.uk/news/business-12954888

4.5 million over-50s expect to work past retirement age

• Twice as many women than men expect to retire after their state retirement age
• 2.7 million over-50s keep working because they can’t afford to retire

• One in five (4.3 million) over-50s had retired but have since gone back into work
• Recent government changes to pensions leave two-fifths of over-50s believing their pensions savings will be worse off

4.5 million of today’s over-50s expect to work beyond their state retirement age by an average of just over 6 years, according to the first Working Late Index, published today by insurance, investment and retirement group LV=. Whilst more than half (55%) of this group expects to work no more than five years past retirement, a quarter (26%) believe they will work five to ten years, and a further one in five (20%) see themselves working well into their 70s or even 80s (10-20 years). Furthermore, the Working Late Index reveals that nearly twice as many women (66%) than men (34%) expect to retire past their state retirement age.

Coming just weeks after the Coalition Government announced that the state retirement age for men and women will rise to 66 by 2020, the LV= Working Late Index finds that the majority (60% or 2.7 million) of late retirees will continue working because they cannot afford to retire otherwise.

In addition, one in ten (10%) late retirees say they will continue to work in the hope that their pension will increase in value. These findings reinforce the issues raised in LV=’s State of Retirement report, published earlier this year, which revealed that cash-strapped over-50s had reduced their pensions contributions by almost £18 billion in the last year as a result of the economic crisis.

Back on the job

According to LV=’s research, one in five (20% or 4.3 million) over-50s who had retired have since gone back to work; 4% full-time, 10% part-time and 6% unpaid in the voluntary sector. Of those who have taken the U-turn from retirement back to the workplace, a third (34%) said they missed working and 32% were looking for a new challenge. Over a quarter (26%) went back to work because their pension (state and/or personal pension) wasn’t enough to support their retirement lifestyle.

Since turning 50, nearly half of those still in employment (46%) have changed the type of work they are doing. Of these, 20% are now doing something less strenuous and challenging, 9% have started their own business, and 4% have moved into voluntary work. But worryingly whether in the same or different type of work, 16% are working longer hours than they did before turning 50.

Ray Chinn, LV= head of pensions, said: ‘’Britain’s over-50s have already slashed their retirement savings by nearly £18 billion in the last year, and now it looks like many will have to continue working to ensure they have adequate income in retirement. This is not only because there is not enough in their pension pots, with 9% of over-50s saying they need to maintain an income to financially support their children. It is worrying to see that many over-50s expect to work up to 15 years past the state retirement age, and in some cases are working even more hours than they did earlier in their careers.”

Government changes to pensions leaving over-50s feeling worse off

When asked about the impact of the Coalition Government’s recent Comprehensive Spending Review, two in five (40%) over-50s said that they expect to have lower savings and income in retirement as a result, compared to just 2% who think they will be better off. While 29% are unsure of how the cuts will affect them.

The Government’s change to the state retirement age to 66 from 2020 has left 47% of people in their 50s believing they will be adversely affected. A quarter (26%) said they will now have to retire later than planned, and 21% said they will retire as planned, but as they won’t receive a state pension in the very early years of their retirement, they will struggle on a smaller income at the beginning.

Worryingly, the LV= Working Late Index shows that only 12% of the UK’s over-50s have always planned to seek advice on their retirement, but a further 7% said they are now planning on seeking professional advice about their retirement as a direct result of recent changes to the pensions system. While 9% had been planning to seek advice but are worried they can no longer afford to do so.

Ray Chinn continued: “Britain’s over-50s are continuing to feel the pressure from all angles when saving for retirement so it is not surprising that people are working later into their retirement or returning to work. Some do so through choice of course, but the majority is forced to by their financial situation.

“We urge those already close to retirement not to give up on saving at such a crucial time. These days there are far more financial options available as you reach retirement age, everything from looking at annuity options carefully (including enhanced annuities) to secure a larger retirement income, drawing an income while your pension stays invested, to releasing equity from your home. Expert advice on your financial situation can go a long way and can help plan for a more relaxed retirement.”

Source IFA Life  16/11/2010

Over 50s heading for retirement with no pension

The latest MetLife Europe survey evidence continues to point to a worsening of our pensions crisis.  Even among those closest to retirement, there is a lack of trust in pensions, as a third of workers are not saving in a pension.  People have clearly lost confidence in pensions and the situation is deteriorating. 

Saga’s recent Survey has shown that one in five over 50s are still in debt, with mortgages to pay off.  If they have no pension savings to fall back on, they will be heading for retirement poverty.  Together with those who have no pension savings, there is a serious risk that up to 3 million people will have nothing but the State Pension to survive on in retirement.

The Coalition Government says it wants to reinvigorate pensions and retirement.  There is clearly a long way to go.

Policy has failed to address this mounting crisis, despite an almost constant barrage of reforms.  Do policymakers really understand pensions?

Urgent radical reform of our state pension system is long overdue.  For the over-50s, saving in a pension scheme is often just not worthwhile, because they are caught in a trap with state benefits taking away their private pension.  The State Pension is so inadequate (a full Basic State Pension is just £97.65 a week) that nearly half of pensioners end up needing means-tested Pension Credit and other benefits in retirement.  However, if they claim these benefits, they will lose at least 40% and often 100% of their pension income.  That makes it very difficult to advise people to save in a pension, because they risk merely saving to replace benefits they would otherwise receive.

The Governments recent apparent proposal for a flat rate pension of at least £140 a week for all future pensioners with a full National Insurance record would remove this problem of means-testing and make it safe for the over 50s to save in a pension.  This kind of radical reform is essential.  Without it, we cannot hope to ensure private pensions work properly to deliver extra income for retirees.  

The proposals for automatically enrolling all workers into a modest company pension scheme will also not serve those closest to retirement well unless state pensions are radically reformed.  Policy must recognise that what matters is not just getting people to put money into a pension fund, but what they ultimately can get out of it.  Unless and until it becomes safe for everyone to save in a pension, we cannot hope to properly deal with the pensions crisis.

Source: Dr. Ros Altmann, Director-General, The Saga Group

All firms must offer pensions, government agrees

The government has agreed that all UK businesses, regardless of size, should offer a company pension scheme or enrol their staff into the new National Employment Savings Trust (Nest). 

Nest is due to start next year, with all firms joining by September 2016. 

The government says it will mean that between four million and eight million workers will start to save in a pension scheme for the first time. 

To be eligible for automatic enrolment, staff will have to earn at least £7,475 a year. 

However their contributions will be based on their income above the national insurance earnings threshold – currently £5,715. 

Workers whose earnings lie between those two levels should be able to opt into Nest and receive employer contributions as well. 

Welcome

The revised rules on Nest come in the recommendations of an independent review into the way workers should be automatically enrolled into the scheme. 

The findings of the review were welcomed by Pensions Minister Steve Webb.

“The National Employment Savings Trust (Nest) will be the new low-cost pension scheme that will be the vehicle for saving for millions,” he said.

 ”For the first time, employers will have to make pension contributions for eligible workers from 2012, ending decades of decline of membership in workplace pension schemes,” he added.

Pensions for all?

The principle of automatic enrolment of employees into pension schemes was established in the Pensions Act (2008), which set out reforms designed to make saving for retirement the norm among employees.

The key feature was that all employers should provide an adequate pension scheme for their eligible employees.

Typically, that means staff who are aged 22 or more and currently earning more than £7,475 a year – the personal allowance for income tax.

If such a scheme is not provided, then the staff will have to be automatically enrolled in Nest instead.

 Employers and employees will also have to make a minimum level of contributions, eventually amounting to 8% of income a year.

The Federation of Small Businesses (FSB) said it was disappointed.

“The proposed changes are still complicated for micro businesses to put in place,” said Mike Cherry of the FSB.

 ”The cost and time spent on administrative work will damage micro firms – those with 10 employees or less.”

Temporary staff

Employers will be given three months’ grace to enrol their staff in either their own scheme – with compulsory minimum employer contributions – or enrol them in Nest instead.

 This element was welcomed by the British Chambers of Commerce (BCC).

 ”Thanks to the 12-week exemption, companies with a high turnover of staff or a large number of seasonal workers will not have to spend a lot of time and money enrolling employees into pensions that they do not intend to continue,” said Dr Adam Marshall of the BCC.

 The review says if a member of staff chooses to sign up before the three-month period elapses, companies will be forced to make contributions then as well.

 The aim is to make sure people who often change jobs can build up a pension pot for their retirement.

However Labour said the revised Nest plan, with a higher qualifying threshold and the three-month waiting period, would disadvantage low paid women workers in particular.

 ”Those that lose out are likely to be the very people that the scheme was designed to reach – namely women and part-time workers, and temporary and agency workers,” said Labour spokeswoman Rachel Reeves.

 Phased in

Nest is due to start next year, with automatic enrolment starting in October 2012, with the largest employers joining first and the smallest joining by September 2016.

 Contributions from staff and employers will also be phased in.

 Until October 2016, the minimum overall level of contributions will be just 2%, with 1% coming from employers.

 From October 2016 to September 2017, total contributions will be 5% with 2% coming from employers.

And from October 2017, the total minimum contribution level will be 8%, with employers contributing at least 3%.

The pension consultants Aon Hewitt warned that lifelong savings in Nest would probably produce only a modest pension.

“Our recent research shows us that the minimum contribution levels will deliver only a very small pension in monetary terms,” said John Foster of Aon Hewitt.

“Our projections reveal that a person earning £20,000 who starts their pension aged 30, can expect an annual retirement income of £1,973.”

 However actuaries Hymans Robertson were more optimistic.

 ”Based on UK average earnings of £25,000 a year and the 8% contribution rate we estimate employees could accrue a pension of £7,000 based on 30 years of contributions or £2,000 based on 15 years worth,” said the firm’s Lee Hollingworth.

Source: BBC News Business, 27 October 2010

Retirement planning falls by the wayside

Almost half of workers under the age of 50 do not think they are doing enough to prepare for retirement, according to Scottish Widows.

Amongst employees under the age of 50, 49 per cent admit to not doing enough now to be financially prepared for their retirement, the latest Workplace Pensions Report from Scottish Widows shows, which analysed the retirement plans of 5,000 adults.

Scottish Widows believes that employee engagement with pensions and financial education are the building blocks of a successful retirement planning strategy.

The majority of employees who are reliant on their company pension scheme, and 44 per cent said the quality of a company pension scheme is an important factor when they are considering potential employers, but the 42 per cent of employees with a defined contribution scheme did not know how much their employers actually contribute.

A further 40 per cent of working respondents said that they think employers which offer access to a pension scheme should also provide pension advice, while 55 per cent said they though they should at least be provided with general information about their company pension scheme by their employer.

The report found that amongst those who expect to receive an income from a private pension in retirement, 43 per cent were still in final salary pension scheme, with 33 per cent relying on these defined benefit schemes to provide them with more retirement income than their personal pension.

Ann Flynn, head of marketing communications for corporate pensions at Scottish Widows, said: “Despite the death of the final salary pension due to its lack of affordability or sustainability, it is clear that many people are still incredibly reliant on their employers and still believe that their defined benefit scheme will provide them with enough money to support them throughout their retirement.

“This is a worrying thought, and we would therefore encourage everyone to investigate if their existing savings are adequately covering their needs,” she said.

Commenting on the pension relationship between employees and employers, Ms Flynn said that “it is important for employers to engage with their employees to help their understanding of the benefits available to them as the individual has to take responsibility and make the correct decisions about their short, medium and long term financial planning needs

Source: Fair Investment Company Ltd, Rachell Styles 27/9/2010

47% of women do not have pension provision

Research by Baring Asset Management has shown that 47% of women who have not yet retired in the UK have not made any pension provision.

This figure has gradually been increasing year-on-year and for 2009 and 2008 was 40% and 39% respectively.

The research highlights other areas of concern:

• 22% of people aged 55 – 64 do not have a Pension
• 1 million people over age 65 still working
• 4 out of 10 people age 25 – 34 do not have a pension plan
• 1 in 3 people aged 35 – 44 do not have a pension plan

The results then go on to highlight that different areas of the UK are affected differently. Alarmingly 47% in the North West do not have any pension plan compared to that of 27% in Wales.

We can offer guidance to people on pensions and you can contact our experts on 02380 004444.

Source:  The Pensions advisery service 13/9/2010

Minister may raise pension age to 70

Britain is being pushed back to ‘the days of Dickens’ by plans to force workers to retire as late as 70, it was claimed last night. 

Ministers warned that millions of workers face the prospect of a retirement date which slips farther from their grasp every year. 

Work till you drop: The pension age is set to rise and rise.

In a major shake-up of state pensions, the Government said the age at which people can get their pension could jump in line with rising life expectancy.

Yesterday it revealed a fast-track, six-week review into the state pension age, currently 60 for women and 65 for men.

Under its current proposals, the state pension age will rise to 66 ‘no sooner than’ 2016 for men and 2020 for women – nearly a decade earlier than Labour’s original proposals.

Labour had also proposed a rise to 67 between 2034 and 2036 and 68 between 2044 and 2046.

But Steve Webb, pensions minister and a LibDem MP, said he was considering ripping up these plans, and raising the state pension age even higher to reflect increasing life expectancy.

He insisted that any new formula would not just be a ‘crude’ link between the two, but warned that leaving the age unchanged is ’simply not an option’.

The proposals triggered a storm of protest last night, with unions and campaign groups warning that they would unfairly penalise manual workers and the poor whose life expectancy is lower.

Bob Crow, general secretary of the Rail Maritime and Transport union, said: ‘If you are a rich banker with a private pension, you can sail off on your yacht at 55. But, for working men and women, retirement will be pushed further and further over the horizon in a step back to the days of Dickens.’

Work and Pensions Secretary Iain Duncan Smith said big increases in life expectancy left the Government with no option but to raise the age at which a state pension can be claimed.

In 1926, when the first contributory pension was introduced, only 34% of men and 40% of women were expected to reach 65. Today, one in four baby boys should reach the age of 100.

Experts said today’s workers should accept that their retirements will be dramatically different from those enjoyed by their own parents.

Laith Khalaf, a pensions analyst at financial advisers Hargreaves Lansdown, said: ‘Today’s children could well be working into their seventies as the state pension adjusts to rises in life expectancy.

‘They will barely believe that their parents and grandparents retired at such a young age. Retiring in your sixties could become a thing of the past unless you build up a big enough pot of private savings while you are working.’

Dot Gibson of the National Pensioners’ Convention said the move would lead to the poorest being forced to ‘work until they drop’.

She said: ‘There can be no doubt that the wealthier you are, the longer you live, therefore raising the retirement age is a direct attack on the very poorest in our society.

‘This policy isn’t about choice. It is about cutting costs.’

It is estimated that the taxpayer will save around £13bn for each year that the state pension age is raised.

Ros Altmann, a former No 10 pensions adviser, said moves to increase the pension age in line with life expectancy were ‘inevitable’.

She predicted a ’social revolution’ with soaring numbers of older people working part-time.

John Cridland of the employers’ organisation the CBI, said: ‘We are in favour of raising the basic state pension age gradually over time, probably reaching 70 by 2030.’

˜ French workers caused widespread disruption yesterday over far more modest plans to raise the retirement age to 62.

Trains and flights were cancelled, schools were closed and newspaper production was halted as unions staged an angry response to measures described by President Nicolas Sarkozy as ‘unavoidable’.

Even under Mr Sarkozy’s plans, French pension rights would remain untouched until 2018, when the retirement age would rise from 60 to 62.

But many French people, long accustomed to generous social benefits, are determined to resist the reforms.It is not uncommon for 60-year-olds in France to retire on virtually the same income as when they were working. 

Source:  http://www.thisismoney.co.uk/pensions/article.html?in_article_id=507025&in_page_id=6

It’s time to take politics out of pensions

We can no longer trust politicians to take care of our pensions, say experts. Instead, they should hand control to an independent body…

Out with the old: Pensions and politics don't mix well, say experts

After years of political meddling, Britain’s once-proud pensions system lays in ruins.

Criticised for being over-complicated and unrewarding, pensions have been rejected by millions of Britons, despite huge swathes of us facing terrifying gaps in our retirement savings.

Fewer than 40% of the working-age population has any pension whatsoever, thanks in no small part to an overly complex system that’s constantly changing.

Now, as the coalition government battles to cut the UK’s bulging deficit, pensions face the threat of the Chancellor’s axe once again.

Already, we know the state retirement age is to rise with sharp and immediate effect, forcing millions of us to work into past our 70th birthday.

Meanwhile, public sector workers have braced themselves for dramatic cuts to their ‘unsustainable’ old age benefits.

And as if that wasn’t enough, the new Government has now knocked a potential £100bn off the value of private final salary pensions in its first ’stealth cut’.

How can we plan for the future if every new government changes the pensions goalposts? How can we be sure our pots won’t be unceremoniously raided in years to come?

We can’t. It’s as simple as that.

Experts fear that there may only be one way to make pensions good again: ban party politics altogether.

Giving power to an independent body, they say, could pave the way for the essential, sustainable reforms needed to stave off a nationwide retirement crisis. Finally, pensions could be made attractive again.

And after the emergency Budget left ‘the most important pensions questions answered’, the clamour to take politics out of pensions has intensified.

Former Treasury adviser, Ros Altmann, has called for a new non-political commission of the best pensions minds to work closely with new minister, Steve Webb, to overhaul the current system and introduce sustainable policies.

‘You’ll work till you drop’: Britons stop saving into pensions

Pensions are too important for politicians

Once properly reformed, overall responsibility for Britain’s pension system could then be permanently handed over to this independently-appointed body, ending the political toing-and-froing that has tainted the past 30 years.

Altmann said: ‘We need an independent body responsible for pensions. These issues are too important to allow party politics to stop decisions being taken for the good of the country.

‘If we had an independent body that’s set in and lasts, we could begin to get to grips with what has become a very serious crisis by making sure that pensions policy stays out of political meddling in future.’

Every week a new report shows the financial torture awaiting many of the Britons who will retire in the coming decades.

Nearly 20% of over 55s still have a mortgage, with an average loan of £50,000, described by insurer Aviva as ‘a significant debt burden’.

Furthermore, a quarter has less than £2,000 in savings, while only 13% have more than £100,000 to see them through old age.

It means millions of over-50s are on a ‘collision course with an impoverished retirement’, with almost eight in ten set to receive an annual income worth less than £8,000.

It smacks of an uncomfortable reality: a generation of Britons has lost touch with the ’savings culture’, disillusioned by constantly flip-flopping pension saving rules and a general lack of clarity when it comes to state benefits in old age.

Now just 14.5m Britons – fewer than 40% of the working-age population – have any sort of pension, according to the Department for Work and Pensions.

Source: http://www.thisismoney.co.uk/pensions/article.html?in_article_id=504342&in_page_id=6

Pension age: Ministers to speed up rise to 66

The government is to speed up plans to raise the state pension age for men to 66, possibly by as early as 2016.

Ministers will also raise the option of extending it further, perhaps to 70 and beyond in the following decades.

The default retirement age of 65 – at which workers can be legally axed by employers – is also set to be axed.

Work and Pensions Secretary Iain Duncan Smith said it was time to “reinvigorate the pensions landscape”.

Under the plans women will move to a state pension age of 66 a few years after men.

‘Talent and enthusiasm’

The coalition team running pensions policy – Conservative Work and Pensions Secretary Iain Duncan Smith and Liberal Democrat pensions minister Steve Webb – announced the proposals at a briefing in London.

Mr Duncan Smith said: “Britain used to have a pensions system to be proud of, but due to years of neglect and inaction we are left with fewer people saving into a pension every year and the value of the state pension has been eroded, leaving millions in poverty.

“We must live up to our responsibility to reinvigorate the pension landscape.

“People are living longer and healthier lives than ever, and the last thing we want is to lose their talent and enthusiasm from the workplace due to an arbitrary age limit.

We also need to recognise that to meet the challenge of providing an affordable, stable pensions system in a society with ever increasing life expectancy, people will need to work longer.”

The previous Labour government’s policy was to raise the pension age to 66 in 2024 and then gradually to 68 by 2046.

The coalition argues that this should be speeded up, eventually meaning a pension age of 70 or older.

The government also wants to scrap the default retirement age – which allows employers to shed staff at the age of 65.

Adam Marshall, director of policy at the British Chambers of Commerce, said such a policy would damage “businesses’ ability to manage their workforce”.

‘Days of Dickens’

He urged the coalition instead to raise the default retirement age or “offer employers a new dismissal route that helps business manage their workforce, regardless of age”.

For Labour, shadow work and pensions secretary Yvette Cooper accused the government of “moving the goalposts” for people in the fifties, leaving them thousands of pounds worse off.

People in Cardiff give their opinions on the changes to the age of retirement

She added: “This is unfair for a group of people who haven’t got time to change their plans.”

Bob Crow, general secretary of the Rail Maritime and Transport union, said: “As well as hitting pay, living standards, public services and jobs, the latest assault from the government is work until you drop.

“If you are a rich banker with a private pension you can sail off on your yacht at 55, but for working men and women retirement will be pushed further and further over the horizon in a step back to the days of Dickens. That is not sharing the pain, it is hitting the poorest hardest yet again.”

‘Unacceptable’

UK life expectancy is currently 77 years for men and 81 for women.

Paul Kenny, general secretary of the GMB union, said: “The government knows that manual workers in the industrial regions of the UK do not enjoy anything like the same life expectancy as professionals or other classes or employees.

“To force someone who has done a lifetime of toil on building sites, farms or in factories to work until they are 66 is completely unacceptable.”

In Tuesday’s Budget the government announced that, from April 2011, the state pension would go up by the increase in average earnings, or in line with prices, or by 2.5% – whichever is highest.

Previously it would go up every April by 2.5%, or the level of the Retail Prices Index the previous September.

This had been considered as unfair by some, as prices had lagged behind average earnings

Source: BBC News channel  11:33 GMT, Thursday, 24 June 2010 12:33 UK

NEST admin contract to be ‘re-examined’ – UPDATED

The computer contract for administering the National Employment Savings Trust – signed by the Labour government just months before they left office – will be re-examined, David Laws says.The chief secretary to the treasury said he had written to all secretaries of state asking them to re-examine all spending approvals since January 1 this year and all pilot schemes.