Your views and questions for Lord Turner

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Lord Turner, On page 7 of the Executive summary you claim that the NPSS based on ‘reasonable assumptions’ might secure at the point at the point of retirement of about 15% of median earnings. In view of the projected start date of 2010 does this mean that the projected pension is based on what might be available at around 2050?

You appear to accept the projections of increased longevity you also accept that there will be no major down turn in investment return over the next 40 years. Historically inflation interest rates and investment returns have been extremely volatile all of which have had a significant effect on the cost of pension schemes and annuities taken together possibly more so than an increase in longevity. The scheme appears to be purely money purchase with nobody providing any guarantee as to a minimum level of benefit so how will you encourage especially the low paid to enter into what may be a high risk investment without any guarantee of benefit level?

Without any government long stop is there not a danger that this will become another form of mis-selling?
Glyn Jenkins, Head of Pensions, UNISON


Just to say to Lord Turner that I’ve read the executive summary and I would like to thank him and his colleagues for cutting through the undergrowth to present what appears to me to be a very thoughtful and pragmatic solution to the pension problem. As a small business owner I believe the solution offered is fair - I don’t believe 3% will make any real difference on a level playing field. Thank you - and I trust that your proposals will be constructively criticised and adopted rather than shelved.
Andrew Wright, Archaeologica Ltd, Milton Keynes


Surely the pensions deficit/problem is mainly due to Gordon Brown and this Governments ludicrous decision to Tax pensions?
David Johnson


Why can’t we move from a state pension to a defined contributions scheme with the state providing a universal minimum pension?
Henry Bacon, Edinburgh


Whatever savings are made will be of no use unless there are those available when pensions are to be paid out to purchase the savings / pay dividends & interest or afford the relevant taxation.

The priority surely should be to maximize the size of the “cake” in 2050 or whatever. Savings are only of value if there is money around to purchase them.

How to share out that “cake” – the money available to purchase shares, pay taxes etc is surely a political decision: what surely we should now be concentrating upon is ensuring that the population of the UK in 2050 is best providing the available income at that time.

But here, then, is the question: those who will create those earners at that time – today’s parents – certainly if they self-employed as increasing number are – are not able to save as much as those who do not have children.

So just how is the Commission proposing to compensate those who can save less because they are funding the upbringing of those children who alone will be able to purchase (etc) such savings? (Either in pension funds or in other forms)

I have put this question poorly, but all those (from bricklayers to professors) who I have put this point to are amazed that this fundamental point has apparently not been dealt with by the Commission.

Should not the Commission have been concentrating more on getting the best and adequate amount of earners in 2050 rather than in making savings which might well prove useless?
Frank Selkirk, Director, The Centre for Ethical Economics


Did you look at the impact that removing the tax from dividends paid within the pension funds over the period of time to the three long term periods in discussion I.e 2030, 2040 and 2050? On a separate note was it possible to change the whole system to people at least part accruing their own pensions rather that the current tax structure supporting current pensioners?
Richard Bennett


Given that private sector pension annuities and life insurance policies take gender and current health into account when calculating a pension value, why was this approach not followed in your recommendations?

For example, given that women on average live four years’ longer than men, why should they not receive a smaller state pension, or be obliged to retire later than men?

Or another example would be: why should smokers not receive a larger state pension than non-smokers, given their probable reduced life expectancy? This is the approach taken with private annuities, so why not the state pension?
Antony Atkins


We welcome the Pensions Commission’s courageous recommendation for a low cost funded National Pensions Savings Scheme (NPSS). In particular, your emphasis on the need to get the new scheme operational as quickly as possible, in order to meet the needs of those on low and middle incomes.

Do you think the NPSS meets the government’s 5 tests ? If you do can you explain how the NPSS would promote personal responsibility for savings and ensure fairness? Is the NPSS affordable, simple and sustainable?
Faisal Aziz, PA Consulting Group, London


It seems that your recommendations call for an increase in retirement ages to 67 years of age. In an era of rising dependency ratio’s and increasing longevity, I find it difficult for any sensible person to argue against this move. What I think is scandalous is that only weeks ago we are told that public sector workers in current employment will continue to retire at 60. This free lunch at the expense of taxpayers is unacceptable.

I know you are an independent body, but surely this sticks in the throat.

How then do you reconcile your recommendations with the current benefits being offered to public sector employees.
Matthew Edge, Partner, Vertus Capital LLC


After graduating I consciously chose lower paid public service over higher paid private sector work because I naively believed that serving my fellow citizen was preferable to exploiting him for financial gain. So every month for the last two decades I have been paying 6% of my uncompetitive salary into my public sector pension scheme.

When recruited, I was told that this excellent pension would at least partially compensate me for the considerable opportunity cost over my working life of being on the lower tier of the “two-tier workforce” as far as pay was concerned.

Now at the age of 45, I am clearly in no position to revisit my graduate decision yet you would have my pension promise broken. It is said with a perfectly straight face that the idea of a “two-tier workforce” (defined by retirement age rather than pay) would be grossly unfair on my private sector fellow-graduates. Never mind that their much higher salaries over the last 20 years have enabled them to build up private sector pension pots large enough to eclipse my own. They, not I, are fretting over their Lifetime Allowances on the run up to A-day.

My question is : if my public sector employer now decides to force me to work beyond 60, demanding yet more of my life and my money, before it will grant me the very benefits it dangled under my nose to get me to disadvantage myself all those years ago, should I pursue them for breach of contract or just plain mis-selling ?

Yours, considering losing even more money by striking for the first time in my life,

A long-suffering public sector worker.
Janet Withington


My Partners company have given her the choice of opting out of the final salary scheme into money purchase scheme, if she wants to continue in the FSS her contributions will double to 14%.

It seems company’s are trying to force people out of the FSS. The £100+ million that the pension fund is short they say the will fill over the coming years, but with the extra contributions from the employees it seems they will be filling part of it themselves.

Do you consider 14% to be realistic? I currently pay 5%.
Colin Eastham, Product Quality Assurance Engineer


A number of commentators have pointed out that the “problem” is that we are living longer. Those who work support those who don’t work no matter whether we save individually or collectively (through taxes).

My question (at last!) is an economic one. What are the “elasticities” of savings and of investment given the above?

In other words, if we had no social security (to simplify the thought experiment) and we all saved and invested, what would happen to investment returns and therefore the retirement income derived from “increased” investment? I am using the terms saving and investment in the strict sense of micro/macroeconomics.

I ask the question because as valuable as I find economic analysis as a way of framing questions and analysis, my experience is that the more important the problem, the more important it is not to rely solely on economic analysis.

The debate, in the popular media up to an including the FT, is always framed in economic terms. The issues of “investing” can and should be viewed in a much wider context.

Since we are living longer, I believe no matter what economic/legal system we choose we will have to work longer or accept lower living standards.

I think it follows that investment is not just in what people see as traditional savings vehicles, but also in very practical things like; - what can I do to live healthier (assuming that the healthier you live, the more you like life) “investing” in exercise for example - what can I do to enjoy life more such as “investing” in discovering work options that are enjoyable as opposed to “just more work.”

I have an uncomfortable feeling that by continuously framing the debate in monetary/economic terms we are setting the population up to believe that some magic solution exists for everybody that they can retire at 65 without accepting a lower living standard (normalising for different savings etc).

Everybody retires. Everybody lives longer. On average. I don’t think the total solution is legislative/analytic. It is just an important, but relatively small, factor.
Hugh Williams


When our countries state pension was first introduced people did not live as long as they do now and they were not as fit as they are now, the state pension should have always been increased along with longevity and fitness to continue to work. We are now left with a knee jerk reaction, as we stay healthier, fitter and living longer so the age to draw state pension should increase or be phased, i.e. it is expected that at a certain age people should be able to work part time, perhaps in a lighter working environment and so the state pension should be streamlined to fit in with today’s lifestyle. One idea may be to have certain light work jobs allocated a star rating for suitability.
Lesley, Rotherham


Why does the Turner report have nothing on the inequitable way tax relief is given? i.e. 40% relief for higher rate taxpayers and consequently the better off.

Is the raising the age for retirement, not a solution but simply giving in?

The problem with the UK pension system and the way tax relief is given is that it too generous to the rich and as a consequence fails the poor. It also fails the majority of middle income earners who are not sufficiently well off to benefit that much from any tax relief on their contributions.

Tax relief on pension contributions should be abolished as was the case with MIRAS on mortgages. This would remove the present inequality and simplify the system regarding tax. While unpopular with the rich and the pensions industry, the report should not aiming to help these groups. The money saved by abolishing tax relief on contributions could be used to increase the basic state pension.

Tax relief should only be within the pension itself i.e. on dividend/interest receipts and on capital gains. This in my view is adequate incentive for the rich to save money within a pension. The poor and middle income groups may require compulsion along with contributions from employers and the state. On raising the age limit - this really discriminates against the worse off who statistically do not have the long working lives. Again it is the better off who typically are able to work longer due to for example better education.

A suggestion along the lines of the Turner report might be to raise the basic state pension to £1,000 a week by increasing the retirement age to 100. Certainly it would be affordable but it is hardly ground braking thinking.

Increasing the retirement age is yet more disincentive to save.

It is the poor and middle income groups who need help and this is what the Turner report fails to address.
Peter Stearn


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