DON’T RAISE THE RETIREMENT AGE say unions

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GMB trade union yesterday said it rejects the Turner report proposal to extend the pension age.

Turner recommends extending the retirement age to ‘between 67 and 69’, which most have taken to mean 68.

Paul Kenny, GMB Acting General Secretary said: ‘Lord Turner says correctly that there is a political trade off between the state pension age and a rise in spending on pensions and that different people would make different judgments.

‘The judgment of the GMB Congress 2005 is that with average life expectancy for men in Glasgow of 69.3 years and for men in Kensington & Chelsea of 80.8 years, a uniform, compulsory pension age of 67 is simply not acceptable.

‘There is no way that GMB will go along with raising the state pension age to 67. GMB will actively campaign against this proposal.’

GMB Congress 2005 considered that a universal state pension of at least £109 indexed to average earnings can be funded from taxation without raising the state pension age.

Naomi Cooke GMB Pensions Officer responded to other aspects of the Report as follows:

‘Lord Turner concludes that state spending on pensions must rise over the next generation, every other EU nation acknowledges this and Britain must do the same. GMB agrees with this.

‘Lord Turner clearly states that the voluntary approach to private pension provision has failed.  The GMB agrees.

‘Companies should be compelled to contribute to their workers’ retirement incomes at a rate that will allow workers to plan for a decent retirement income that acknowledges the decades of service to the British economy.

‘The GMB maintains this should be on the basis of an employer-member ratio of 2:1. The National Pension Savings Scheme proposal does not go far enough to meet the occupational pension needs of Britain’s working population.

‘He is also right to say that significant reforms to the state system are needed to address the discrimination that is inherent in the current arrangements. Fundamental reform of the NI structure is required that redistributes from those on higher earnings above the UEL to those on lower incomes.

‘There is a case for increasing NI contributions for all to ensure a decent level universal pension can be relied on for those who make a valuable contribution to British society and the economy by caring for children and older citizens. 

‘The Pension Commission’s acceptance that means testing does not serve current or future pensioners well is also welcomed by the GMB.  This is why the GMB has advocated a universal state pension of at least £109 indexed to average earnings and end to means testing for pension benefits with immediate effect, not just for those over 75 but for all Britain’s pensioners.

‘Turner and his team are right to state that there is no paralysis inducing crisis in the pension system but the GMB points to the recent DWP report on women and pensions that clearly demonstrates that there is urgent need for radical action regarding provision for women both within the state and private systems.

‘The GMB believes other measures should also be taken to address the pension needs of this generation and those to come to which Turner gives insufficient weight.

‘1. Tax relief should be reformed to allow one standardised rate that puts an end to the current enjoyment of excessive tax relief by high earners.

‘2. Maximum limits on boardroom pensions should be rigorously enforced so company directors cannot exploit loopholes allowing them to pay minimal tax on pensions worth millions of pounds.

‘3. Employers must be rewarded for providing good quality occupational provision. The PPF levy must be reformed so it does force companies into insolvency and does not act as another excuse for companies to worsen workers existing pension rights. The fund should be underwritten by the government and funded by a levy on all employers.

‘4. The accounting mechanism needs to be reformed and simplified.

The GMB believes that all sections of society need to be realistic about retirement income.

‘The state has an obligation to those who do not enjoy an income today that enables them to save.

‘Those individuals with the wherewithal to save should do so as part of a system with which they have security and confidence.

‘Companies must make decent pension provision for all their employees not just those in the boardroom – one workforce, one pension scheme.’

Tony Woodley, General Secretary of the Transport and General Workers’ Union, said: ‘Ministers must not duck the need for compulsion to make employers pay up for the future.

‘Turner’s recognition of the role of employer, worker and state in pensions provision should form the basis of a future settlement to provide for the security of generations of pensioners and workers.

‘Employers must acknowledge that they are part of the solution to the pensions problem.

‘If they are allowed to evade their responsibilities then all of society will pay the price.

‘The TGWU calls on government, employers and employer organisations to seek a settlement for the long-term not just a cheap, quick fix.

‘Full compulsion into secure schemes, combined with a universal state pension, is the only way for pensions to work for everyone, including low paid workers, women and carers.

‘Yet raising the state retirement age will penalise the very people who miss out on adequate pensions now, and government should reject such an approach.

‘It is vital that the public services agreement on pensions is honoured to ensure public sector workers get a fair deal.

‘The TGWU will continue to push for compulsion and no raising of the state retirement age during the consultation process.’

The Pensions Commission report ‘is a good first step,’ said UNISON general secretary Dave Prentis.

He added: ‘We are pleased that the commission has recommended the state pensions’ link with earnings should be restored. It should, however, start at a good base rate. This is something we have been saying for a long time.’

Prentis stressed, however, that the Turner Report’s proposal to raise the state pension age to 68 by 2050, did not take into account that the life expectancy of some workers has not risen.

‘This will mean more people will either not reach retirement or have less time enjoying it,’ warned Prentis. ‘The protections suggested in the report for this group are very weak because they rely on means testing.’

The commission also recommended the setting up of a national pensions saving scheme for all workers.

According to the proposals, employees would automatically pay contributions of 4 per cent of gross pay above £5,000 into the scheme. Employers would be obliged to contribute a further 3 per cent.

UNISON said it has long argued the need for compulsory employers’ contributions. But, said Prentis, Lord Turner’s report could have gone further.

‘If a national savings scheme were introduced then employers should be made to pay more than three per cent,’ he said. ‘Employer’s contributions should be 10 per cent.

‘An employers’ rate of three per cent would not provide an adequate pension for the low paid, especially part-time women workers.’

TUC General Secretary Brendan Barber said: ‘We remain opposed to any proposal to increase the state pension age that would make manual workers and the poor worse off.

‘They should not have to pay for a new pensions settlement.

‘We will be studying in detail the option to allow 65 year olds to claim means tested pension credit as this could provide some help for those who would lose out the most from this proposal.

‘We welcome the proposal to scrap a formal default retirement age.

‘We think this should be a matter for individual choice. But if people are to work longer then we will need major changes in employer attitudes, and new routes through part-time and changed job roles to a flexible retirement.

‘The Commission’s proposal for linking the basic state pension to earnings once again is extremely welcome.

‘You cannot build a long-term pensions system on mass means-testing of pensioners, and making the basic state pension a sure foundation for all is the right approach.

‘While we would want to see an increase in the basic state pension to pensions credit level, we recognise that a reformed state second pension will do this for many people.

‘Making a universal pension based on residence retrospective was always tricky. Giving a higher state pension as of right to the over-75s is an effective way to help many of the poorest women pensioners, and those put off means-tested benefits.’