Pensions Forum

As I said right back at the beginning “I started this blog because I think it’s important to create a consensus around the future of pensions policy.” We have achieved a great deal since then – the Pensions Bill is now passing through the House of Lords and our state pension reforms carry the consensus of all parties. When we published further details on our proposals for automatic enrolment and personal accounts in June I was particularly pleased to note the continuing support of our stakeholders. And perhaps most heartening of all were the recently published findings from our “Attitudes to Pensions 2006″ survey – with 80% of people in favour of personal accounts.

Of course there is still plenty for Government to do in order to deliver our promised reform of pensions. I’m sure you will continue to follow developments with interest. For now I just wanted to thank you for following this blog, for taking time to send in your comments and helping us shape our policies and build that all important consensus.

The consumer organisation Which? has been a constructive supporter of our proposals for personal accounts - designed to tackle the real problem of people not saving enough for retirement.I believe very strongly that the consumer should be at the heart of policy-making. I don’t think there’s any contradiction between designing a scheme that’s good news for consumers, while also providing support for the pensions industry. Personal accounts can achieve both those goals.

I was delighted when Which? asked me to accept a consumer champion award for the Government’s proposals on personal accounts. But, in truth, this award was very much a tribute to the hard work of everyone who has contributed to developing the policy and creating a consensus around our proposals. Much credit must go to the Pensions Commission for coming up with the model on which personal accounts is based but I would also like to thank Which? and other organisations including the EOC, TUC, Age Concern, and Help The Aged - who have all been real champions of the scheme, and played such a vital role in developing that consensus.

A busy day yesterday, not only for me but also for the DWP printers, as we published four separate documents, exploring attitudes and opinions to saving and our personal accounts proposals.

I started the day at the London School of Economics for a lively discussion on the findings from one of them - looking at young people’s attitudes to saving - with a small group of students from Merton College and Croydon College.

See further pictures of the event.

Understandably, pensions are not uppermost among young people’s priorities and our research found that most young people take a “live now, save later” attitude towards pensions. Nevertheless, it did indicate that many recognise the need to save for a pension, even if most aren’t actually doing so. More encouragingly, they did welcome two of the key planks in our reform - automatic enrolment and the introduction of Personal Accounts.

I was also most impressed with the thoughtful questions and interest in saving for retirement expressed by those at the event. And the pertinent issues raised by the students - including the importance of clear information, who will decide how the money will be invested, the degree of risk and the benefits of tax relief - have certainly given me some food for thought.

The young people’s report wasn’t the only one we published today. We also published the results of our survey “Attitudes to Pensions 2006”. Again, this showed widespread support for personal accounts - with over 80% of respondents in favour. It did also highlight the need for simplicity, with a quarter saying they know “little or nothing” about pensions. Something I’m confident we can achieve with the introductions of our reforms in the coming years.

The final publications to hit the stands today were both response documents. The first was a response to the Work and Pensions Select Committee report on personal accounts and the second, our response to the consultation that followed the publication of our Personal Accounts White Paper last year. The consultation response provides a round-up of the many stakeholders’ reactions to our White paper and also some further detail on how proposals will operate, including an announcement that Personal Accounts will be run as an occupational pensions scheme, managed by a board of trustees - thereby placing the interests of members at its heart.

A number of people have recently been posting blog entries asking for advice on personal circumstances, such as the whereabouts of missing National Insurance contributions and whether it will be worthwhile continuing to make voluntary contributions. While I’m always glad to receive posts, I’m afraid I’m unable to give advice on individual circumstances on this blog.

However, if you are interested in receiving personal information relating to your national insurance contribution record or pension I’ve set out below a number of helpful website addresses and telephone numbers which should assist you to resolve your queries.

In the meantime for those of you wanting to debate our policies and reform proposals, keep the posts coming…

The Pension Service homepage has a number of helpful links to a wide range of pension issues and queries: http://www.thepensionservice.gov.uk

The Inland Revenue enquiry service link below also provides some helpful links and contact numbers: http://www.hmrc.gov.uk/nic/enquiry-service.htm

The Pensions Advisory Service Tel: 0845 601 2923 Is an independent non-profit organisation that provides free information, advice and guidance on the whole spectrum of pensions covering State, company, personal and stakeholder schemes. http://www.pensionsadvisoryservice.org.uk/

National Insurance Enquiries for Individuals Tel: 0845 302 1479
Deals with various enquiries regarding National Insurance for individuals including Age Exemption, Home Responsibilities Protection (HRP), Married Women’s Reduced Rate Election (MWRR), Statement requests, Class 3, Automated Refunds, Deferment Renewals.

Deficiency Notice Helpline Tel: 084591 55 996
Answers queries from customers who have received a letter about a shortfall in their National Insurance records.

Today I was at the Industry Forum in London talking to some of the representatives of the UK’s biggest companies about the far reaching reforms we are in the process of making to the UK pensions landscape.

Also at the same event was Paul Thornton, who was talking about the findings of the Institution Review, which was published today. You’ll recall that back in January we asked Paul to look at the institutions that regulate, compensate and mediate work based pensions – such as the Pensions Protection Fund and the Pensions Regulator - and report on whether they are best placed to support work based saving now and after our reforms in future. The full text of his review is available here. But to summarise - there are, after all 90 pages – Paul thought that the current arrangements are working well, and while no wide scale changes were needed, there were a number of ways we could improve the already good joint working practices in future, including bringing together the Pensions Ombudsman and the Financial Services Ombudsman.

A commonly held misconception is that the old are afraid of new technology. Actually, when it comes to the internet, nothing could be further from the truth.

A study published today found that older web users, aged 55 and above, are set to pass the 35 to 44 year-old demographic as the age group with the largest representation on the internet.

This is good news; increasingly the starting point for people’s engagement with the real world, from accessing local services to finding a job, is through the internet. Harnessed in the right way, internet technology can vastly improve the quality of life for older people, from day to day activities such as helping them stay in contact with friends and relatives or finding out about learning and volunteering opportunities in their area.

So today I’d like to use my blog post to highlight the sixth annual Silver Surfers Day – because, despite the encouraging statistics, there are still significant numbers of pensioners who don’t know how to access online services. Silver Surfers Day is organised by Digital Unite and Ofcom, and offers older people across the country an opportunity to learn about using the internet at a friendly, informal local event.

And it’s not just about sessions in the local library. Among the many who’ve responded this year are allotment owners at Manor Gardens in Hackney who are bringing in a wireless network to their gardens, by use of a mast powered by little more than a lorry battery and a strategically placed wok.

So if you – or, as is more likely, someone you know - might be interested in participating; there’s a full list of the many and varied events taking place up and down the country available here.

Directgov have recently completed some research looking at what the elderly would most like from the internet in future. Top of their wishlist was comprehensive information about local services for their age group – including transport, leisure and learning opportunities. Other areas they were interested in seeing progress on was planning for retirement and information on volunteering opportunities.

In some areas we’re already one step ahead of the game, for instance information on working, learning, travel, leisure and planning for retirement for the over 50s is already accessible via the Directgov site. In others we need to look at how we can best ensure that the elderly aren’t left out in a digital age and challenge stereotypes about older people being afraid of information technology.

According to our latest, recently revised projections, under our reforms someone on low income who retires in 2050 with a full contribution record can expect to get £145 from the state pension in 2007/08 earnings terms. This is almost 20% more than a similar person retiring today can expect.

My last entry on this blog was about new statistics that the Department has produced and so is today’s entry. I may be in danger of overloading this page with numbers but these revisions to our long-term estimates of the costs and outcomes of our reforms are particularly pertinent as the debate on the Pensions Bill begins in the House of Lords next week with 2nd Reading on Monday.

So why have our estimates changed? Well, as with most long term estimates they haven’t remained static over time – in this case they’ve been affected by new data we’ve received on earnings and inflation, not to mention assumptions on future rates of economic and price growth set out in this year’s Budget (for those of you interested in that sort of thing these are set out in Chapter B of the Financial Statement and Budget Report).

So today we’ve published a factsheet that not only takes account of this new data but equally importantly presents our estimates in today’s money, i.e. in 2007/08 terms.

None of these revisions change the arguments for our reforms, but they do change some of the detailed numbers we will be using, and will allow a better comparison between benefit levels in the future and those today.

I hope you’ll agree that as far as statistics go, these are definitely worth adding to others here on my blog.

Readers of this blog are well aware that we’re planning major changes to the future structure of our state pensions system. One of our guiding principles for these reforms is fairness – in particular, achieving fairer outcomes for women. The reforms in our Pensions Bill will deliver a full basic state pension to over 90% of women reaching State Pension age from 2025 – compared to around 30% today.

Nevertheless, some people will still not accrue a full State Pension, even after our reforms, for a number of reasons - perhaps because for a part of their working life their earnings were below the ‘Lower Earnings Limit’. Over the past few months the Department’s analysts have been trying to find out a little more about these people.

Today we’re publishing a factsheet examining the number of people – in the main, women – who have more than one job but are not earning enough in any one of them to build entitlement to State Pension. Analysis in our 2005 report Women and Pension: the evidence suggested that fewer than 50,000 women were in this position at a point in time in 2003/04.

The analysis in this factsheet has used further statistical surveys to develop this work, identifying the number of women within this group whose total earnings exceed the threshold for accruing State Pension. We find only around 15,000 women, or around 0.1% of the current working age female population, are in this category. The factsheet sets out how we’ve arrived at this figure.

I’d like to use today’s blog entry to lend my support to the Your Rights campaign launched earlier in the month by Age Concern to encourage older people to claim the benefits they’re rightfully entitled to.

Most people are very diligent about collecting their full wages – scrutinising pay slips to ensure that overtime or bonuses have been paid and checking deductions made by employers. Strangely - I think - the same cannot be said for many people when it comes to their retirement income. In fact, large sums of state benefit – mainly council tax benefit and Pension Credit - allocated to older people sometimes go unclaimed despite our best efforts to inform people about them.

This is money that could make a huge difference to the quality of person’s life; awards of Pension Credit are on average £46.91 a week. Claiming Housing Benefit could mean paying less or no rent at all.

The Age Concern campaign will run over the next year to encourage older people to claim the benefits that are rightfully theirs. As part of the campaign Age Concern will carry out a free confidential benefit check for anyone contacting their local Age Concern and assist them in filling in relevant forms. Further information and advice on their campaign is provided on their website.

Alternatively, if you want to check whether you have an entitlement to Pension Credit and make a claim, you can contact the Pension Service directly on their free-phone number 0800 99 1234.

If you want to check and claim on a range of benefits including Pension Credit, Housing Benefit and Council Tax Benefit, you can also contact your local Pension Centre on 0845 60 60 265. They will be able to advise you and facilitate your claim within one phone call.

Of the House that is. After a few weeks of detailed debate in Committee earlier this year, the Pensions Bill returned to the House of Commons on Wednesday for Third Reading. Third Reading gives all MPs the chance to debate a bill for the final time before it goes to the Lords. You can read what was said here and I’ll be updating you on how the Bill now progresses in the Lords, but in the meantime, here are answers to a couple of your questions.

Pension Reform - what will it mean for me?

P Doughty - thanks for raising this question - I’m sure its one that has occured to many people on hearing the news of our reforms. Over the past months on this blog I have written a lot about the outcomes we expect for future pensioners as a result of our reforms. For example, how carers might benefit or what returns people might see for saving in a personal account. What we can’t do is give people their own individual forecasts before the Bill is fully debated by Parliament as we have no guarantee that our proposed reforms will remain unchanged when they become law. We will provide this information about individual entitlement as soon as we can. I will of course keep you posted on our progress.

National Insurance autocredits

P Doughty also asks about the future for autcredits. I can confirm that they will be phased out. National Insurance credits, known as ‘autocredits’, have been available since 1983 to men who are unemployed and aged 60 to 64. They would have become available to women after 2010 as their state pension age increases but our proposals to widen access to Basic State Pension - particularly the reduction to 30 qualifying years for a full basic state pension - will mean autocredits become largely redundant. Autocredits will be phased out in line with the staged increase in women’s State Pension age - between 2010 and 2020.

The Pension Advisory Service

Steve asks about his wife’s private pension. Although I can’t deal with queires about specific circumstances on my blog I can point Steve in a direction which I hope, he and others will find useful. The Pensions Advisory Service can help with confidential advice on specific queries about private pensions. TPAS is a not-for-profit organisation that provides free, expert information on a whole range of pensions issues.

Their website is www.pensionsadvisoryservice.org.uk and their helpline number is: 0845 601 2923.

Queries can be emailed to their “ask our experts” facility on the homepage.