14/01/2013
Pension Reform
UNISON warned today that many workers will still face poverty in retirement,
despite the government’s claims that its proposed overhaul of the state pension
system will improve pensions.
Millions of workers will also be clobbered
with higher national insurance payments under the plans.
As the
government today issues its long-awaited white paper on state pension reform,
UNISON said that radical action was needed to halt the decline in pension
provision in the UK, which stands to leave many people in financial misery in
retirement.
Many employers that sponsor defined benefit pension schemes
are facing an increase in national insurance contributions – which from April
2017 could be as high as 3.4%. The union said it feared this would have a
knock-on effect that passed cuts onto employees, including the low
paid.
Commenting on the paper, Karen Jennings, UNISON assistant general
secretary said:
“These changes are being lauded as a good deal for
pensioners, but it is worth remembering that £144 is still well below the
poverty line, and more will need to be done to prevent workers finding
themselves desperately poor in retirement.
“Who will be worse or better
off following these changes will depend on salary growth, which remains stagnant
for many workers, including millions in the public sector, and inflation, which
continues to eat at the income of low earners.
“What is clear is that
the real winner is likely to be the Treasury, who will receive a national
insurance boost from pension scheme members and employers. This windfall must go
back to employers otherwise there is a real risk that many will look to dumb
down their current pension offerings even further.
“The government must
not hide behind this as a ‘good news story’: It is their duty to guarantee that
workers – and in particular the lowest paid – are not left worse off as a result
of these proposals either now, or in their retirement.”
While the union
welcomed the intention to simplify the confusing existing pensions system, it
said it would be looking at the implications of the proposals in the white paper
in detail, and would respond to the consultation in full.
The new
flat-rate is designed to combine the basic state pension with the second state
pension. The union pointed out that this will not affect those who already
receive, or will begin receiving their state pension before the next Parliament.