Compulsory pension contributions might become a reality if a new assessment of UK's current voluntar...
Compulsory pension contributions might become a reality if a new assessment of UK's current voluntary approach falls flat.
Following Wednesday's release of the independent Pensions Commission work plan for the next year, the government is taking yet another step towards the introduction of compulsory saving.
Set up in December 2002, the Commission is to review the regime for UK private pensions and how effectively the current voluntary approach is developing over time.
On the basis of this, the Commission will then make recommendations to the Secretary of State for Work and Pensions on whether compulsory pensions should be taken into consideration.
Chair of the Commission Adair Turner says:
"The work plan sets out the key areas of analysis needed to assess the UK's pension system and whether there is a case for moving beyond the current largely voluntarist approach."
"We plan to publish our first take on the full state of UK pension provision and the challenges it faces around the middle of next year. We expect to make recommendations in two to three years time but this does not preclude making early recommendations. If there are things to say, then we will say them."
Andrew Smith, Secretary of State for Work and Pensions says:
"I welcome the Pension Commission's thorough and comprehensive approach and look forward to receiving their analysis and recommendations."
Also pleased with this latest development is Virgin Money's director Gordon Maw who says:
"This is what we have been calling for over the last three years, a full debate on the merits of a compulsory pension system in the UK. It is clear today that the current voluntarist system has failed us, therefore we need to quickly get to the stage where we can make a decision on the way forward."
But Maw is unsure whether the government and Tony Blair will be bold enough to implement a compulsory pension regime as it would add further fuel to people turning their backs against the regime.
"The approach looks thorough and appropriate but the biggest single factor has been left out of the workplan. Can this government or any, for that matter, implement a compulsory pension regime when many in power consider it to be a potential vote loser?"
"The UK pensions industry is punch drunk from countless reviews but this is potentially the one that really counts. None of the work until now has put a single penny into people's pensions, but now the industry and the government have the opportunity to revolutionise the way we save for our retirement. Hopefully, the final recommendations will match the bold statements upfront."
An interim report is planned for mid 2004 and it is expected that the first report - including preliminary recommendations - will be finished by Summer 2005.
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