Pensions - Articles - Living in a fools paradise says former Pensions Minister

Sir Steve highlighted that whilst government figures indicate around 15m people will not have an adequate income in retirement, this is based on the triple lock mechanism lasting forever. If the triple lock is replaced with annual increases only in line with inflation (CPI), the number of people who will have an inadequate retirement income leaps to over 25m. Sir Steve described the situation as “living in a fools paradise”.

 

The same event saw Phil Warner from Dalriada Trustees gave a fascinating run-through of the history of pensions starting with the early forerunners to the State Pension from the Chatham Chest of the 1500’s and Poor Laws to the Old Age Pensions Act of 1908 which was non-contributory; only payable to those “of good character” and payable from age 70. Then came the creation of the State Pension in the 1940’s, payable at age 60 from women and 65 for men. The 1959 National Insurance Act saw the State Pension and Occupational pensions interact before being separated by the 2014 Pensions Act. As Warner concluded, “…its’ simpler for state and occupational schemes to remain separate, no matter how much they influence each other”.

 

Rebecca Howard, Senior Practice Development Lawyer, Pinsent Masons LLP gave an overview of Pre and Post 1988 GMP (Guaranteed Minimum Pension), bridging pensions and state pension offsets/deductions – demonstrating the significant complexity of how the State Pension and Occupational schemes have interacted.

 

Stuart Earle, Partner, Eversheds Sutherland, who chaired the event, said: “Hearing about the past, present and future of both state and occupational pensions and how they interact proved genuinely illuminating. We are moving ever closer to the original State Pension Age of the early 1900’s (70) and as Sir Steve highlighted the ticking time bomb of inadequate pension saving is probably worse than the government and others think.”