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HARMAN WELCOMES MAJOR REPORT ON UK PENSIONS

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A major new report provides an authoritative analysis of the issues facing UK pensions today. ...
A major new report provides an authoritative analysis of the issues facing UK pensions today.

The Pension Provision Group (PPG) was set up last year by social

security secretary Harriet Harma, to analyse current and future

trends in UK pension provision. The PPG's report is the first

independent, comprehensive analysis of pension provision ever

commissioned by government, and will play a crucial role in informing

the forthcoming Green Paper on pensions.

Ms Harman said:

'I commissioned this report because our pensions decisions must last

for at least the next 50 years. We must be clear about the issues we

need to address.

'This report sounds a clear warning that many people who are now

working face a big drop in their income when they retire. They will

be worse off than they think they will be and they will be worse off

than they need to be.

'We take this very seriously and our new 'stakeholder pensions' will

help those who could be saving, and saving more, for their own

retirement.

'The report reinforces our view that there is a new role for the

state in extending second tier pensions to people who lose out.

'Whilst there is a continuing role for the state, which the report

recognises, there is a particular need to provide more help to those

on the lowest incomes. These are people not able to save towards a

second tier pension.

'Over recent years many people have benefited from a better income in

retirement and people believe that this will continue into the

future. What this report shows us is that by 2025, although some will

be better off, more people will see a bigger drop.

'The report is clear that it is the combination of a good second

pension and the basic state pension that provides a reasonable income

in retirement.

'Stakeholder pensions will fill the many gaps in second pension

provision the report has identified. They will provide a new

framework for flexible second pensions that will offer better value

for five million people.'

Ms Harman outlined the key elements of the stakeholder pension:

- low charges

- no penalties for career breaks

- flexible and portable between jobs

Ms Harman concluded:

'The pension provision group makes clear that we have great

challenges to face - in the future people will spend longer in

retirement and we want to make sure that they have an income which

will enable them to have a good standard of living and enjoy an

active retirement.'

NOTES

1. Orders of the main report, priced at£25, can be placed

through The Stationery Office (tel:0171 873 9090).

2. A summary version of the Pension Provision Group's report

is available on the internet at www.dss.gov.uk. A free,

printed copy of the summary can be ordered from:

DSS Pensions

Freepost BS 5555/1

Bristol

BS99 1BL

Telephone: 0345 31 32 33

(Calls are charged at local rates and the line is open 24

hours a day).

EU MINISTERS AGREE TO SAFEGUARD OCCUPATIONAL PENSION RIGHTS

European Union citizens who work in different member states

throughout their careers no longer face pension losses when taking up

work outside their home state.

European ministers today agreed a Directive which will safeguard

occupational pension rights of employed and self- employed people who

work in different member states throughout their career. The

Directive was agreed at the social affairs council in Luxembourg

today. It will ensure:

- preservation of supplementary pension rights when moving

from one member state to another in line with that when

changing employer within a member state.

- arrangements for staying in the 'home' state scheme on

short-term posting to another member state;

- cross-border payment of pensions.

Keith Bradley, minister with responsibility for European issues at

the department of social security said:

'The UK presidency has achieved a notable success by brokering

agreement on a package of measures designed to encourage the mobility

of labour within the European Union. I am delighted to see progress

in this very important area where agreement has proved impossible

until now.'

Pensions minister John Denham said:

'Today sees an important first step in the field of occupational

pensions with agreement on a Directive which will help to remove

disincentives for people wishing to pursue careers across borders.

'The Directive marks an important move towards our goal of allowing

European citizens to move from country to country without suffering

any pension loss.'

'It will also help businesses who will be able to use their resources

more effectively and so reduce their administration costs.'

Keith Bradley added:

'I am pleased that agreement has also been reached - after seven

years of discussion - on extending the social security co-ordination

regulations to cover civil servants in special social security

schemes. It will potentially benefit in excess of 20 million workers

in the EU.'

A package of technical amendments to the regulations on social

security for migrant workers was also agreed.NOTES

1. The EC Social Security Regulations (principally Regulation

1408/71) protect the social security benefit and health care position

of employed and self-employed EU nationals and their families who

move from one EU country to another. They co-ordinate but do not

harmonise member states' schemes.

2. The agreement to extend Regulation 1408/71 to civil servants in

special schemes, through amending regulations, will allow large

numbers of civil servants to have their individual social security

rights protected more fully. Although this will have little impact

for the UK (as UK civil servants belong to the same National

Insurance scheme as all other employees) it will have a significant

effect in countries such as France, Germany and Spain where the

majority of public servants are in such special schemes.

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