UK Facing Pensions CrisisFebruary 25 2021
Last year and earlier this year the media carried numerous articles and reports regarding speculation regarding the future of the Triple Lock (TL) the mechanism introduced several years ago to protect and improve the State Pension (SP). No sooner had it be introduced when the usual suspects began a well orchestrated campaign to undermine it. Various, so called think tanks, began arguing that it was unaffordable and that it was placing an unsustainable burden on younger generations. With the emergence of the Covid-19 crisis they changed tactics and argued that because of the financial consequences of the lockdown the TL would harm any chance of a recovery and once again it was unaffordable. We have covered this issue on a number of occasions and reported recently that the government’s decision to introduce legislation to safeguard the entitlement for another year was very welcome. However, the campaign to protect the mechanism is far from over. The numerous think tanks, all of which are financially supported by big business, will be renewing their efforts the closer we get to next year’s review of the entitlement and once again it will be under threat. It’s fair to say that the CWU has been at the forefront of the campaign to support the TP and this will continue throughout the year and beyond. The publication of a recent report has highlighted why this issue is so important not just to current pensioners but to those still working who are facing retirement in the future.
Becky O’Connor from Interactive Investor, a private pensions provider, which commissioned the research said. ‘The high proportion of people who say they do not have a pension is deeply worrying’. She is of course referring to either a private or occupational pension and goes on to say. ‘All adults of any age, in any region and whether man or woman should have a pension. The findings should concern Government and industry as it suggests the problem of poverty in old age will steadily worsen over the coming decades’. She went on to say. ‘More generous defined pensions will become a thing of the past and today’s army of self – employed people, who are less likely to have a pension, reach a point where they stop work. Even those with defined contribution workplace pensions may find their pot doesn’t generate enough income in retirement’.
Whilst the report showed that just over half (52%) of people have at least one pension and 17% have several younger adults were shown to be most at risk of old age poverty. Thirty – five percent of 18 to 34 – year olds say they are not saving, compared with 31% of 35 to 54 year olds and 22% of those aged 55 or older. Three percent said they didn’t know if they had one. Those without either a private or occupational pension will have to rely on the SP of £9,110 which is available only after 35 full years of National Insurance contributions. Becky O’Connor went on to say ‘The Government will only have to pick up the bill in the form of higher benefit payments later on if people have nothing of their own to fall back on when they retire. Equally, the findings underscore the need for the protection of the State Pension through the Triple Lock’.
The report showed that as many as 15 million people have no private pot for their old age and face having to live on the £153 – a – week benefit provided by the SP. It also showed up there is a growing pensions divide across the UK and across genders. Scotland ( 22%) and Northern Ireland (18%) are the areas where people are least likely to say they do not have retirement funds. However people in the North East (44%) have no work place pension and are the least financially prepared for retirement. They were followed by the East and West Midlands both at 35%. The cities facing the biggest pensions crisis are Nottingham (42%), Newcastle (39%) and Liverpool (38%). Women (31%) are more likely than men (26%) not to have retirement savings. Many experts say that the differences reflect decades of employment and income trends in different parts of the country and warn that the divide is likely to get worse.
These findings show how important it is to protect the Triple Lock and why the CWU will continue to campaign against any attempt to undermine it. The county needs a completely new approach to the issue of retirement and pensions. The relentless attacks on decent occupational pensions and SPs are leading to a future pensions crisis. Only the trade union movement and the wider Labour movement have the ability and organisation to combat and reverse these attacks. We need to look at the experiences of the past in both the UK and in other industrialised countries on how we can protect and improve retirement and pensions in the coming years before it is too late.