The Government is already distancing itself from one of the most contentious proposals in the Picker...
The Government is already distancing itself from one of the most contentious proposals in the Pickering Report: the removal of indexation from occupational pensions.
Work & Pensions Secretary, Andrew Smith MP, said in a statement to the Commons that the Government would look at the proposals to end compulsory indexation on guaranteed minimum pension payments. But, he added: 'On first reading, these proposals are not attractive.'
Danny Cox, pensions development manager at Hargreaves Lansdown, said: 'I think it won't be taken on board judging by the reaction of the unions, groups such as Age Concern and, indeed, the Government.'
The Pickering proposal, Cox continued, would benefit people with money-purchase pension schemes as it would give them a wider choice of annuity when they retired. Someone in ill health may not want an inflation-linked pension and could instead prefer higher payments, he said.
However, people with final salary schemes would be at a disadvantage, he noted, as their future security, the inflation proofing, would be removed.
This, added to the fact Pickering proposed removing a spouse's entitlement to a proportion of their deceased partner's pension, makes it deeply unattractive to people with final salary pensions, according to Cox.
Alasdair Buchanan, head of communications at Scottish Life, was surprised at the approach taken by Pickering and felt the proposals were not realistic.
'It's not politically tenable to erode the benefits for a small group of pensioners,' he said.
Those most affected would be people who lived into old age, according to Buchanan, and would therefore have their pension eroded over a long time by inflation. Spouses whose partner had died could be forced onto means-tested benefits, he added.
Financial regulators renew anti-pensions scam campaign
Our weekly heads-up for advisers
Permissions regained on 10 August
Also worked at Westpac and Barclays
Auto-enrolment enforcement rises