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
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
'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
'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
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:
Freepost BS 5555/1
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
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.