For immediate release: Monday 17th March2003

 

Contact: Katey Karam or Susanna Mordaunt

Telephone: 020 8765 7200 Out of Hours: 07071 243243

 

EU POLITICAL LEADERS MEET TO DISCUSSCRISIS OF CONFIDENCE IN EUROPEAN PENSION POLICIES

 

This weeks European summiton adequate and sustainable pensions (20th/21st March, Brussels) will highlightsignificant uncertainty behind the UKs pension strategy at a time whenpublic confidence in the pension system is at an all-time low.

 

The first full EUassessment of national pension systems will be presented at the summit[1],which will recognise member governments social and financial concerns within anageing European population.

 

Sustainability of futurepensions is a key concern among the majority of member states, although thisclearly does not apply to the UK which spends the least amount in the EU onpublic pensions[2]. However, adequacyof UK pensions is still a major problem, with 2.2 million UK pensioners livingbelow the poverty line[3].

 

According to the report, theUK population are most worried about their state pension, believing that withmy state pension I will get by with great difficulty over twice theproportion of some of the other countries. Age Concern believes that the roleand level of state pension and how it should interact with other elements ofthe pensions package must be examined by the Government, ensuring it remainsthe foundation of retirement income.

 

The report also points outthat low spending on UK public pensions is dependent on the assumption thatprivate and work based pensions savings will increase in the future. In lightof the low take-up of private pensions[4]as well as recent slumps in stock market and pension schemes, Age Concernbelieves this is an unrealistic reliance which questions the Governmentsoverall strategy.

 

Age Concern believes theGovernments proposals for pension reform in its recent Green Paper on pensionsmiss the opportunity to create a more coherent pension settlement, which shouldbe based on a new partnership between the state, individual and employers.

 

The report also emphasisesthe importance of improving incentives for older workers to remain in thelabour market. Age Concern supports this view, and welcomes proposals in theGreen Paper to introduce laws to abolish mandatory retirement ages inemployment. We are now looking to the Government to commit wholeheartedly to introducingthese laws.

 

Gordon Lishman, Age Concern EnglandsDirector-General, said:

 

Discussions at nextweeks summit will reinforce our view that the debate around the Green Paper onpensions offers a once in a generation opportunity to get the UKs pension system right.

We desperately need a new pension settlement that we can all buyinto one that inspires the confidence of individuals and employers to save inaddition to the states input, and which will ensure a decent income in laterlife[5].Tomorrows British pensioners are not prepared to stake all their future incomeon a stock market that is not returning. Instead we also need to pool riskthrough the state system to protect everyone.

 

We also seek a commitmentfrom Government to implement its proposal to abolish mandatory retirement ages.This must be followed by legislation to ensure that workers post 65 have thesame employment rights as those below 65.

 

Ends pr10/13/03/03/kk

 

Notes to Editors

 

  1. Age Concern has spokespeople available. Please call Katey or Susanna in the media unit on 020 8765 7200.
  2. Age Concern England is a key member of the European Older Peoples Platform AGE. AGE is also commenting on the EU policy of coordination on pensions.
  3. A media brief on the report by the European Commission and European Council is available. Please call Katey or Susanna in the media unit for a copy.
  4. Age Concern is the leading charity in the UK concerned with ageing and older people, and works to improve the quality of life for all older people.

 


[1] The meeting of the EuropeanCouncil will take place on Thursday 20th and Friday 21stMarch in Brussels. The Joint report by the Commission and the Council onAdequate and Sustainable Pensions will be presented at the summit. The reportis available on the following link:http://europa.eu.int/comm/employment_social/news/2002/dec/joint_pensions_report_en.pdf

[2] UK pension spending is predicted to fall from 5.5%of GDP in 2000 to 4.4% in 2050.

[3] Households Below Average Incomes 2001-2 (DWP).

[4] Contributions per worker relativeto national average income grew only slightly from 1997-2001, and appear tohave stalled below 8% of NAE. This suggests there has been very little newcontribution to private pension saving in the last 5 years. There is thereforeno evidence to suggest that people are saving more for their pensions (ThePensions Landscape by the Pensions Policy Institute, February 2003).

[5] Age Concern research by theFamily Budget Unit in November 2002 recommended that a modest but adequateincome should be 200 for a single tenant and 160 for a homeowner (withmortgage paid off). The basket of goods or budget standards approach was usedto reach these figures a method which looks at the real costs of everydaylife such as food, clothing, a bus fare or ticket to the cinema.