| CBI says second state pension needs to be restructured |
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The Confederation of British Industry (CBI) today made it clear that it was in favor of a revamped second state pension so that workers on low and modest salaries can have a more comfortable retirement.
The CBI believes that a new version of the state second pension is the best way to provide low-level workers with some income to put away for their old age. It also suggested that the government could run the second state pension but experts in the private sector would manage the investments in the scheme. CBI pensions policy adviser Anthony Thompson, said, "Once you get down the income scale to low earners, the actual return becomes less and less, and more and more money gets taken up in administration costs. We think that by pooling money collectively and managing those resources through the state, we can get a much better rate of return for those people through a revamped second state pension".
John Cridland, deputy director general of the CBI, said," Private pensions have helped millions of individuals to save successfully for their retirement and will do so in the future. The pensions market is a source of great strength. However, a serious gap in UK pension provision exists among lower earners and staff in some smaller firms. They are not saving enough and arguably are not earning enough to fully benefit from what the market currently offers. The best way to plug this gap is to revamp the second state pension so that help is offered to those who need it most."
The CBI is due to submit its report to Adair Turner's Pensions Commission, which is due to furnish its final report sometime in autumn. "We do believe that as we get older as a society people should accept we should be working slightly longer and that we should take our pension at a slightly older age. I think we've got to get much more flexible about when people stop working, maybe work part-time when they get to their old age and not retire at 60 or 65 as people do now," Mr. Thompson concluded.
The CBI said that a revamped second state pension would allow someone earning £20,000 a year to increase his retirement payments from around £100,000 to more than £135,000, enriching his fund payout by nearly £2,000 each year.
Posted
on : Tue, 31 May 2005 20:00 GMT | Pensions News
By : Anne Philips
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