Tuesday, 17 December, 2002, 16:20 GMT
Pensions proposals at-a-glance
People need to save more for retirement
Here are the main points of the pensions green paper:
- The government must address the problem caused by the increase in the number of people who are expected to live beyond retirement age.
- Government is sceptical about compulsion because individuals are best placed to judge their own needs.
- People must save more or work more.
- Three million middle class people are not saving enough at the moment.
- Linking the state pension to earnings would not be sustainable in the long-term.
- Government also rejects plans to scrap means-tested benefits and add them to the basic state pension because it would take money away from the poorest pensioners.
- State retirement age will not be raised.
- People who defer their state pension to 70 may be able to get a lump sum of £20,000 on top of their normal pension, £30,000 for a couple.
- Self-employed can opt-in to second state pension.
- New pensions regulator to be created, focusing on schemes
with a high risk of fraud or maladministration.
- Main Pickering recommendations accepted, including simplifying occupational pensions and abolishing the Minimum Funding Requirement and Guaranteed Minimum Pension.
- Single tax regime for pensions to be introduced.
- Employers can make membership in a pension scheme a condition of employment.
- Compulsory retirement age to be scrapped.
- Public service retirement age to be raised to 65 for new entrants, with the option later to offer to existing public sector workers.
- People will be allowed to work after receiving their occupational pension.
- Raise the earliest age from which a pension can be taken from 50 to age 55 by 2010
- Individuals would be able to contribute up to £200,000 per year to their pension scheme, and a lifetime limit of £1.4m.
- The tax free lump sum would remain.
- Annuities may be reformed by introducing limited period annuities which could be bought for a set period of time, or "value
protected" annuities which would pay out a lump sum if the holder died before
the age of 75.
- Sandler recommendations on the simplification of savings will be accepted,
such as introducing more low-cost personal pensions, coupled with cheaper financial advice to ensure more money is put towards savings.
- Age discrimination legislation to be introduced.
- Independent pension commission headed by Adair Turner, former Director General of the CBI, to examine whether there is a case for moving beyond voluntarism to compulsory pensions
The BBC is not responsible for the content of external internet sites
Top Business stories now:
Links to more Business stories are at the foot of the page.