An article said that defined-benefit pensions in the public sector were worth more as a share of the total remuneration package than they were in the private sector. The key reasons for this advantage were: longer job tenures; the option of claiming pensions earlier; and lifetime earnings profiles that peaked in workers' late 50s rather than their late 40s.
Source: Richard Disney, Carl Emmerson and Gemma Tetlow, 'What is a public sector pension worth?', Economic Journal, Volume119 Issue 541
Links: Abstract | IFS press release | Liberal Democrats press release | Nursing Times report | Local Government Chronicle report
Date: 2009-Dec
A paper set out details of a model designed to assess whether or not it was profitable for private sector providers to offer a new pension to a particular type of firm; and whether it was worth continuing to offer, or to expand, existing pensions.
Source: Kyla Malcolm, Tim Wilsdon and Charles Xie, Workplace Pension Market Model, Working Paper 74, Department for Work and Pensions
Links: Working paper
Date: 2009-Dec
An article said that New Labour's approach to the problem of security in retirement (relying on measures to encourage saving and improve financial literacy) was 'flawed'.
Source: Barbara Waine, 'New Labour and pensions reform: security in retirement?', Social Policy and Administration, Volume 43 Number 7
Links: Abstract
Date: 2009-Dec
Researchers examined employer attitudes to collective defined-contribution (CDC) pension schemes (designed to provide a more predictable level of retirement income while removing any financial liability due to poor investment returns for the employer). Employers recognised that CDC schemes offered a middle ground between a defined-benefit (DB) and defined-contribution (DC) scheme: but CDC schemes were seen to offer no greater security than a DC scheme because pensions would not be guaranteed, and they were unlikely to provide a level of pension comparable to a DB scheme.
Source: Elizabeth Jordan and Andrew Thomas, Employer Attitudes to Collective Defined Contribution Pension Schemes, Research Report 623, Department for Work and Pensions
Links: Report | Summary | People Management report
Date: 2009-Dec
Researchers examined small employers' likely responses to the workplace pension reforms set out in the 2008 Pensions Act. Although there was broad support for the general aims of the reforms, the economic climate at the time of the fieldwork meant that small employers were concerned about an increase to the cost of their businesses. This was apparent even among those employers that already provided a company pension scheme, and especially apparent among those providers with low participation rates. Employers found it difficult to estimate the cost of each administrative stage required to implement the reforms: this was partly due to a lack of understanding of the detail of the reforms, and partly due to the way some small employers outsourced their administration.
Source: Andrew Thomas and Cassie Philpin, Understanding Small Employers' Likely Responses to the Workplace Pension Reforms: Report of a qualitative study, Research Report 617, Department for Work and Pensions (0113 399 4040)
Links: Report | Summary | DWP press release
Date: 2009-Nov
The results were published of a consultation on the most appropriate investment approach for the new personal pension accounts, holders of which would be low-to-moderate earners with a tendency to be relatively risk-averse.
Source: Building Personal Accounts: Designing an investment approach – Key findings of the public consultation, Personal Accounts Delivery Authority (020 7412 1552)
Links: Report
Date: 2009-Nov
The pensions industry regulator said that there was 'some cause for concern' over the fact that members of defined-contribution pension schemes were not always presented with helpful and timely information as they approached retirement.
Source: A Review of Retirement Information for DC Members, Pensions Regulator (01273 811800)
Links: Report | Pensions Regulator press release | Guardian report
Date: 2009-Oct
A report provide a high-level overview of defined contribution (DC) pension scheme provision, by drawing together existing available evidence on DC pensions into a single document.
Source: Chris Dobson and Sarah Horsfield, Defined Contribution Pension Provision, Research Report 608, Department for Work and Pensions (0113 399 4040)
Date: 2009-Oct
A business organization set out a reform agenda for both the state and private retirement benefit systems. It proposed four fundamental changes: the state pension age should rise to 70 as soon as reasonably practical; the state second pension should be abolished, together with most means-tested state retirement benefits; savings made should be diverted to the provision of a universal basic state pension 'probably' above the existing level; and the existing private pension saving regime should be replaced.
Source: Malcolm Small, Roadmap for Retirement Reform 2009, Institute of Directors (020 7766 8866)
Links: Report | TUC press release | Personnel Today report
Date: 2009-Oct
A report examined the different types of occupational pension plan, and the main regulations that affected them; and reviewed what the regulations were designed to achieve.
Source: David McCarthy and Anthony Neuberger, The Economic Basis for the Regulation of Pensions, Research Report 603, Department for Work and Pensions (0113 399 4040)
Links: Report | Summary | DWP press release
Date: 2009-Oct
A think-tank report said that existing expectations of a comfortable and lengthy retirement funded by the state were out of date. It proposed a more generous state pension for older pensioners, enhancing the savings of people on low earnings, and a simpler state pension framework.
Source: Michael Johnson, Don't Let This Crisis Go to Waste: A simple and affordable way of increasing retirement income, Centre for Policy Studies (020 7222 4488)
Links: Report | CPS press release
Date: 2009-Sep
A survey found that the proportion of defined-benefit pension schemes that were closed to new entrants stood at 87 per cent, up 6 points on the position reported two years previously.
Source: Twilight or a New Dawn for Defined Benefit Schemes? Report 1 2009 Pension Trends Survey, Association of Consulting Actuaries (020 7382 4594)
Links: Report | ACA press release | FT report
Date: 2009-Sep
A report said that although the government's policy of auto-enrolment and personal pension accounts represented a big opportunity for savers, the scheme needed to be extended to cover pension payments above £3,600 if it were going to have a major impact. Many savers would be forced to open private pensions that often charged exorbitant costs (up to 40 percent of the value of their pension).
Source: David Pitt-Watson, Pensions for the People: Addressing the investment crisis in Britain, Royal Society for the Encouragement of Arts, Manufactures & Commerce (020 7930 5115)
Links: Report | RSA press release
Date: 2009-Sep
Researchers examined the existing evidence on non-retirement saving among lower-income households. Most people on lower incomes saved in some form, albeit sporadically and in small amounts. There was, however, a heavy reliance on informal saving methods, such as saving cash at home and buying saving stamps.
Source: Elaine Kempson and Andrea Finney, Saving in Lower-Income Households: A review of the evidence, Personal Finance Research Centre/University of Bristol (0117 928 9954)
Links: Report | Summary | Bristol University press release
Date: 2009-Sep
The government began consultation on draft regulations designed to implement the reform of workplace pensions. It said the new personal accounts scheme, due to be phased in over three years from 2012, would be delayed by a year in order to give employers more time to cope with the higher costs and administration involved.
Source: Workplace Pension Reforms: Completing the picture, Department for Work and Pensions (020 7962 8176)
Links: Consultation document | People Management report | Guardian report | Personnel Today report
Date: 2009-Sep
A survey found that one-half of companies with defined-benefit pension schemes expected to have closed them to all employees by 2012.
Source: Press release 17 August 2009, Watson Wyatt (020 7222 8033)
Links: Watson Wyatt press release | Telegraph report | Human Resources report | FT report | Guardian report
Date: 2009-Aug
A paper examined individuals' attitudes towards planning and saving for later life. It included an audience segmentation of people of working age: the segments were grouped together based on the common attitudes and behaviours held by respondents in each segment.
Source: Anna Thomas, Joceline Jones, Shiona Davies and Dave Chilvers, Individuals' Attitudes and Behaviours Around Planning and Saving for Later Life: Findings from qualitative and quantitative research, Working Paper 72, Department for Work and Pensions (0113 399 4040)
Links: Working paper
Date: 2009-Aug
A report examined the motivations of people who volunteered to become pension trustees.
Source: Susan Sayce, Motivation and Pension Trusteeship Survey Report, Centre for Diversity and Equality in Careers and Employment Research/University of East Anglia (01603 591286)
Links: Report | UEA press release
Date: 2009-Jul
A report presented the findings of a qualitative study that explored pension providers' and intermediaries' likely behaviour in response to the government's workplace pension reforms.
Source: Andrew Wood, John Leston and Marisa Robertson, Pensions Industry Responses to the Workplace Pension Reforms: Qualitative research with pension providers and intermediaries, Research Report 592, Department for Work and Pensions (0113 399 4040)
Links: Report | Summary | DWP press release
Date: 2009-Jul
A report presented the findings of a qualitative study that explored existing practices in workplace personal pensions, with regard to charging structures and levels, and investment options.
Source: Andrew Wood, John Leston and Marisa Robertson, Current Practices in the Workplace Personal Pension Market: Qualitative research with pension providers and intermediaries, Research Report 591, Department for Work and Pensions (0113 399 4040)
Links: Report | Summary | DWP press release
Date: 2009-Jul
An article examined issues relating to public and private pensions for individuals from some of the major minority-ethnic groups. A belief in the need for retirement planning was held by respondents of all backgrounds. There was a widespread view that the state pension should be increased to a more adequate level, and concern among some respondents that they would be unable to receive retirement income from pension schemes if they were to retire in another country. More widespread information about retirement planning was needed in minority-ethnic media.
Source: Orla Mary Gough and Rod Hick, 'Ethnic minorities, retirement planning and personal accounts', International Journal of Sociology and Social Policy, Volume 29 Issue 9
Links: Abstract
Date: 2009-Jul
The Court of Appeal set out the principles that needed to be applied to sex equalization for defined-benefit pension schemes. It said that schemes could adopt pragmatic approaches to equalizing pension ages between men and women, with no need to allow members windfall bonuses where these were not required to comply with the basics of European discrimination law.
Source: Foster Wheeler Ltd v Hanley and Others, Court of Appeal 8 July 2009
Links: Text of judgement | Professional Pensions report
Date: 2009-Jul
An audit report said that overpayments to public service pensioners totalling £90 million had been caused by a 'complex and fragmented' administrative process, prone to error, for which there was no clear overall responsibility.
Source: Review of Errors in Guaranteed Minimum Pension Payments, HC 878 (Session 2008-09), National Audit Office, TSO (0870 600 5522)
Links: Report | Summary | NAO press release
Date: 2009-Jul
The Saving Gateway Accounts Act 2009 was given Royal assent. The Act provided for a national cash saving scheme for those on lower incomes, providing a financial incentive to save through a matching government contribution for every pound saved.
Source: Saving Gateway Accounts Act 2009, HM Treasury, TSO (0870 600 5522)
Links: Text of Act | Explanatory notes
Date: 2009-Jul
An article examined the employment effect of the increase in labour costs implied by the proposed new National Pensions Savings Scheme. The effect was likely to be greatest for small firms since few of them had any supplementary pensions of the quality that was required. The negative employment effect would be reduced to the extent that there was non-compliance or opt-out: but if this occurred, the purpose of extending pension coverage to employees on lower earnings would be defeated.
Source: Bernard Casey, 'The National Pensions Savings Scheme: its implications for jobs in small firms', International Small Business Journal, Volume 27 Number 3
Links: Abstract | Warwick University press release
Date: 2009-Jul
A government-commissioned report examined issues affecting the long-term competitiveness of the insurance industry. It recommended a partnership between the insurance industry and government to better manage risk in society – including unemployment, ill-health, and the need for a retirement income on long-term care – and to explore options to increase savings and protection provision.
Source: Insurance Industry Working Group, Vision for the Insurance Industry in 2020, HM Treasury (020 7270 4558)
Links: Report | HMT press release | ABI press release | TUC press release | Telegraph report
Date: 2009-Jul
A think-tank report said that the accumulated liability of unfunded public sector pension schemes was greater than the national debt. It said that the government had been using 'financially indefensible methods' to work out its liabilities and how much workers needed to contribute to the schemes.
Source: Neil Record and James Mackenzie Smith, Public Sector Pensions: The UK's Second National Debt, Policy Exchange (020 7340 2650)
Links: Report | Policy Exchange press release | Professional Pensions report
Date: 2009-Jun
A report by a committee of peers examined aspects of the 2009 Finance Bill, focusing on measures relating to the taxation of foreign profits, real estate investment trusts, and pensions. It said that plans to restrict tax relief on pension contributions for people with incomes over £150,000 per year could be seen as the 'thin end of the wedge' in reducing relief more generally.
Source: The Finance Bill 2009, Third Report (Session 2008-09), HL 113, House of Lords Economic Affairs Select Committee, TSO (0870 600 5522)
Links: Report | BPF press release | BSA press release | Telegraph report | Professional Pensions report
Date: 2009-Jun
A think-tank report said that the planned introduction of personal pension accounts should boost pension coverage, but that many individuals would accumulate relatively small amounts.
Source: Carl Emmerson and Matthew Wakefield, Amounts and Accounts: Reforming private pension enrolment, Commentary 110, Institute for Fiscal Studies (web publication only)
Links: Commentary | IFS press release | People Management report
Date: 2009-Jun
A report compared the public sector occupational pension liabilities of the United States of America, United Kingdom, and Canada. In the UK, where unfunded schemes predominated, public sector pension liabilities were £1,177 billion – equivalent to 85 per cent of national income, and much higher than in North America.
Source: The Need for Transparency in Public Sector Pensions: A comparative study of occupational public sector pension schemes in US, UK & Canada, British North-American Committee (melanie.jones@underlinegroup.com)
Links: Report | BNAC press release | Personnel Today report | Times report
Date: 2009-Jun
A report said that businesses were being put off bidding for public service contracts by the need to mirror public sector pensions when staff were transferred from the public sector to the private. It proposed that staff transferred to a private contractor should be able to retain membership of their public sector scheme, with the private employer paying into that scheme at the same level that a public sector provider would have done.
Source: A Question of Balance: Reforming pension practice in public services contracting, Confederation of British Industry (020 7395 8247)
Links: Report | CBI press release | Personnel Today report
Date: 2009-Jun
A paper assessed the optimal rational demand for five-year guaranteed investment vehicles inside personal accounts, using an economic model of optimal lifetime savings and consumption.
Source: David McCarthy, Investment Guarantees for Personal Accounts, Working Paper 62, Department for Work and Pensions (0113 399 4040)
Links: Working paper
Date: 2009-May
A paper said that the government should issue 'longevity bonds' in order to allow insurance companies and pension schemes to hedge aggregate risk that could arise from unanticipated changes in longevity.
Source: David Blake, Tom Boardman, Andrew Cairns and Kevin Dowd, Taking the Long View, Pensions Institute/City University (020 7040 8600)
Links: Paper | Pensions Institute press release
Date: 2009-May
The parliamentary ombudsman criticized the government for rejecting many of her recommendations relating to the handling of problems at the insurer Equitable Life.
Source: Injustice Unremedied: The government's response on Equitable Life, HC 435, Parliamentary and Health Service Ombudsman TSO (0870 600 5522)
Links: Report | PHSO press release | Guardian report | Professional Pensions report
Date: 2009-May
A paper said that the problem of rising national debt could be alleviated by the rapid introduction (but slow implementation) of a policy to extend working lives. Increasing working lives would raise consumption and tax revenues and reduce pension spending. These gains by the government could be used to improve services, cut taxes, or pay off debts.
Source: Ray Barrell, Ian Hurst and Simon Kirby, How to Pay for the Crisis: Macroeconomic implications of pension reform, Discussion Paper 333, National Institute for Economic and Social Research (020 7654 1901)
Links: Discussion paper
Date: 2009-May
A discussion paper examined the most appropriate investment approach for the new personal accounts pension scheme. It recommended a 'safety first' approach to investment, in order to ensure that people did not lose confidence and stop saving for their retirement.
Source: Building Personal Accounts: Designing an investment approach, Personal Accounts Delivery Authority (020 7412 1552)
Links: Discussion paper | PADA press release | FT report
Date: 2009-May
An article reported the results of a survey of 76 major pension schemes on their perceptions about longevity risk and the practicality of the solutions open to them for managing the risk. The schemes were relatively optimistic about the trends in life expectancy, expecting medical advances to continue extending lifespans. However, they continued to use mortality assumptions that predicted a slowdown in longevity improvements. The schemes reported relatively high levels of awareness of the main methods of managing longevity risk: but few had implemented these methods.
Source: Alistair Byrne and Natalie Winter, 'Living with longevity', Pensions: An International Journal, Volume 14 Issue 2
Links: Abstract
Date: 2009-May
The government announced (in the 2009 Budget) that the state pension would rise by a guaranteed minimum of 2.5 per cent in 2010 (or in line with inflation, if higher). Pension credit would be made more widely available, to those with savings of up to £10,000 from November 2009 (rather than the existing limit of £6,000). Tax relief on pension contributions would be cut for those with a taxable income of £150,000 or more from April 2011, from the existing 40 per cent to 20 per cent. From 2010-11 the annual allowance for tax-exempt individual savings accounts would increase from £7,200 to £10,200, of which £5,100 could be deposited in a cash account. The new limits would be introduced in October 2009 for those aged 50 and over.
Source: Budget 2009: Building Britain's future, HC 407, HM Treasury, TSO (0870 600 5522)
Links: Report | Hansard | HMT press release | Hansard | PWC press release | ACA press release | BSA press release | BBC report | Guardian report | Telegraph report
Date: 2009-Apr
An article set out a series of principles for pension design rooted in economic theory. There was no single best pension design; earlier retirement did little or nothing to reduce unemployment; unsustainable pension promises needed to be addressed directly; a move from pay-as-you-go towards funding in a mandatory system might or might not be welfare improving; and implementation mattered – policy design that exceeded a country's capacity to implement it was bad policy design.
Source: Nicholas Barr and Peter Diamond, 'Reforming pensions: principles, analytical errors and policy directions', International Social Security Review, Volume 62 Issue 2
Links: Abstract
Date: 2009-Apr
A report by a committee of MPs expressed deep disappointment with the government's response to the collapse of the Equitable Life pension company – describing it as 'shabby, constitutionally dubious and procedurally improper'.
Source: Justice Denied? The Government's response to the Ombudsman's report on Equitable Life, Sixth Report (Session 2008-09), HC 219, House of Commons Public Administration Select Committee, TSO (0870 600 5522)
Links: Report | Telegraph report | BBC report | Guardian report
Date: 2009-Mar
A report presented findings from qualitative case study research aimed at understanding reasons for non-participation in pension schemes where there was a 3 per cent or more employer contribution.
Source: Suzanne Hall and Wendy Floyd, Understanding Why Some Employees Don't Participate in Employer Pension Schemes, Research Report 570, Department for Work and Pensions (0113 399 4040)
Date: 2009-Mar
A briefing note examined how the tax system treated the return to saving. Households held their assets in a range of forms that faced different tax treatments, which could equate to quite big differences in the level of the tax on the return to these assets. Differences in tax treatment could be due to the tax rates that an individual faced, as well as to the types of asset in which they chose to save. Tax rates on the return to assets had generally converged over the previous 30 years.
Source: Matthew Wakefield, How Much Do We Tax the Return to Saving?, Briefing Note 82, Institute for Fiscal Studies (web publication only)
Links: Briefing Note
Date: 2009-Mar
A paper said that the perceived importance of pension planning was positively correlated with respondents' risk tolerance, age, and income, and whether their spouses participated in employer-sponsored pension plans. Those less likely to believe planning for the future was important were younger, earned less, were women, and would rely upon others for their expected retirement welfare.
Source: Gordon Clark, Janelle Knox-Hayes and Kendra Strauss, The Significance of Socio-Economic Status, Financial Sophistication, Salience and the Scale of Deliberation in UK Retirement Planning, Working Paper WPG08-16, Centre for Employment, Work and Finance/University of Oxford (01865 285070)
Links: Abstract
Date: 2009-Feb
An article examined the expectations of people in defined-contribution and personal pension schemes over consultation arrangements. Respondents who expressed an interest in a high degree of consultation over the pathway to retirement were older, had higher incomes, and recognized the significance of retirement saving schemes for their long-term welfare.
Source: Gordon Clark and Janelle Knox-Hayes, 'The "new" paternalism, consultation and consent: expectations of UK participants in defined contribution and self-directed retirement savings schemes', Pensions: An International Journal Volume 14, Issue 1
Links: Abstract
Date: 2009-Feb
A report examined a time series of pension annuity rates for 1994-2007. The average money's worth of annuities for a man aged 65 had been 90 per cent; and for a woman aged 65, 91 per cent. Taking into account load factors associated with annuity contracts and in comparison with other financial and insurance products, this implied that annuities were fairly priced.
Source: Edmund Cannon and Ian Tonks, Money's Worth of Pension Annuities, Research Report 563, Department for Work and Pensions (0113 399 4040)
Date: 2009-Feb
A report examined the financial incentives to save for retirement – the impact of saving under the system laid out in the Pensions Acts 2007 and 2008, and the wider impacts of measures proposed by stakeholders to improve incentives. A linked literature review examined motivations, understanding, perceptions, and behaviour relating to saving for retirement.
Source: Saving for Retirement: Implications of pensions reforms on financial incentives to save for retirement, Research Report 558, Department for Work and Pensions (0113 399 4040) | Roger Wicks and Sarah Horack, Incentives to Save for Retirement: Understanding, perceptions and behaviour – A literature review, Research Report 562, Department for Work and Pensions
Links: Report | Summary | Literature review | DWP press release | TUC press release | Watson Wyatt press release
Date: 2009-Feb
The Saving Gateway Accounts Bill was given a third reading. The Bill was designed to offer a national cash saving scheme for those on lower incomes, providing a financial incentive to save through a matching government contribution for every pound saved.
Source: Saving Gateway Accounts Bill, HM Treasury, TSO (0870 600 5522) | House of Commons Hansard, Debate 25 February 2009, columns 289-327, TSO
Links: Text of Bill | Explanatory notes | Hansard
Date: 2009-Feb
The Saving Gateway Accounts Bill was given a second reading. The Bill was designed to offer a national cash saving scheme for those on lower incomes, providing a financial incentive to save through a matching government contribution for every pound saved.
Source: Saving Gateway Accounts Bill, HM Treasury, TSO (0870 600 5522) | House of Commons Hansard, Debate 13 January 2009, columns 133-176, TSO
Links: Text of Bill | Explanatory notes | Hansard | HOC research brief
Date: 2009-Jan
A report called for action to end the 'pensions apartheid' between public sector and private sector provision, and to limit the costs of the former. It recommended raising the public sector retirement age in line with the state pension age as an essential first step.
Source: Corin Taylor, The Pensions Apartheid: The problem, the cost and the tough choices that need to be made, Institute of Directors (020 7766 8866)
Links: Report | IOD press release | Professional Pensions report
Date: 2009-Jan
A survey examined pension provision in firms with 250 or fewer employees (collectively employing 59 per cent of the working population). 80 per cent of these businesses offered no workplace schemes. Where pensions were offered, over 90 per cent of defined-benefit schemes had been closed.
Source: 2008 Smaller Firms Pension Survey Report, Association of Consulting Actuaries (020 7382 4594)
Links: Report | ACA press release
Date: 2009-Jan
The opposition Conservative Party announced proposals to abolish income tax on savings for everyone on the basic rate of tax, and raise the tax allowance for pensioners by £2,000 to £11,490. These changes would be paid for by restricting all government departments – except for health, schools, defence, and international development – to a 1 per cent real increase in spending in 2009-10.
Source: Speech by David Cameron MP (Leader of Conservative Party), 5 January 2009
Links: Text of speech | Conservative Party press release | TUC press release | ABI press release | IOD press release | Guardian report (1) | Guardian report (2) | FT report
Date: 2009-Jan
The government announced that it would compensate policyholders affected by the collapse of life assurance company Equitable Life in 2000 – but only those 'hardest hit'. A former appeal court judge would advise the government on who should receive payment, and how much.
Source: House of Commons Hansard, Debate 15 January 2009, columns 377-394, TSO (0870 600 5522)
Links: Hansard | HMT press release | Professional Pensions report | Telegraph report | FT report | BBC report | Guardian report
Date: 2009-Jan