© The Financial Times Ltd 2016
FT and 'Financial Times' are trademarks of The Financial Times Ltd.
The Financial Times and its journalism are subject to a self-regulation regime under the FT Editorial Code of Practice.
November 19, 2004 2:00 am
The pensions bill scraped through parliament on Thursday to a chorus of criticism from business and the pensions industry.
The government immediately sought to regain the political initiative by promising a new strategy for an "ageing society". But it will struggle to contain anger in the business community and fend off opposition attempts to woo the "grey vote".
The CBI led the attacks against the new legislation, intended to restore confidence in work-related schemes, as a "missed opportunity". The employers' group is particularly angry at late amendments that will increase costs on companies. "Overall, the final bill has become complex and confusing," said John Cridland, CBI deputy director-general. "It may have the perverse effect of encouraging firms to move away from final salary schemes."
Opposition peers lost a last-ditch vote to raise from 75 to 80 the age by which people are required to turn their pension pot into an annuity, removing the last hurdle to the bill's passing into law.
Critics of compulsory annuity purchases are pinning their hopes on a government review following the conclusions of the Pensions Commission next year.
The pensions bill sets up the Pension Protection Fund to insure final salary schemes, creates a pensions regulator to root out fraud and maladministration of funds and is supposed to simplify pension fund rules.
Employers and the National Association of Pension Funds believe the government's intentions were good, but feel the final bill could prove counter-productive. They are angry that under a late change the PPF, into which all defined benefit occupational schemes pay a levy to cover future crises, will cover companies already on the brink of insolvency.
There is widespread concern that the pensions regulator will interpret very widely its powers to investigate and penalise the underfunding of schemes.
The government has still not given any details of how the regulator will "clear" corporate transactions in advance to ensure companies are not shirking their pensions responsibilities.
The NAPF said that rather than simplify the management of pension schemes, the bill will "introduce reams of prescriptions that will increase compliance".
Government strategy will probably take the form of a green paper covering pensions, employment and healthcare for the elderly and will be published in the new year.
One of the first tasks of a cabinet committee created to co-ordinate policy will be to break the deadlock between ministers over whether business should continue to set compulsory retirement at 65.
The bill aims to protect existing occupational schemes, but experts fear it will impose extra costs, red tape and legal liabilities, discouraging companies from offering new final salary schemes.
Alan Johnson, work and pensions secretary, told the AARP conference sponsored by the Financial Times that the strategy for "an ageing society" would cover employment, anti-discrimination measures, pensions, healthier lifestyles in old age and better co-ordination between central and local government.
Copyright The Financial Times Limited 2017. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.