Monday 3 November 2008

More TPA rubbish on pensions

The right-wing Taxpayers’ Alliance has another report out on pensions today. Their stuff to date has been pretty poor, and the latest one is no better. Just a few examples. On page 5 of the report they say the following –

“Most public sector schemes still have a pension age of 60…”

This is either poor research or deliberately very unclear. The normal retirement age for new entrants in the NHS, teachers, civil service schemes is now 65, and it already was in the local government scheme. It’s not hard to find this information out, a quick Google search will do it, so why does the TPA get it wrong?

I can only think that either they simply didn’t bother to check, and just assumed that NRA is still 60. Or they know that it is 65 for new entrants but simply chose to just reflect the position for members of the scheme who had joined before the change. How hard is it to write that the NRA is now 65 for new members, having previously been 60? Doesn't look good does it?

Secondly have a look at this –

“Political management of the UK pensions system has failed to provide a decent retirement income for many people and has been a painful lesson in the limitations of government. The history of the state pension system has been littered with broken promises, while it is immediately apparent that the proposed NPSS could lead to lawsuits on a massive scale. The possibility that contributions may prove to have been worthless because they end up disqualifying the individual from pension credits or other benefits is just the tip of the iceberg.”

First a trivial point. No-one calls the new scheme the National Pension Saving Scheme (NPSS) anymore – it’s called Personal Accounts and has been for a couple of years, hence the Personal Accounts Delivery Authority. Again a simple search or just reading the papers would tell you this, but it does suggest again that the TPA isn’t even doing the most basic research.

Secondly what about the bit in italics. The TPA suggests that Personal Accounts could be in trouble because of the interaction with means tested benefits. So what do they propose instead?

“The reforms in Australia and Chile point to a more practical solution in the UK, along NPSS lines. The kernel could be private pension pots (PPPs) alongside a new system of means-tested benefits paid according to circumstances and irrespective of age.”

The Aus and Chile systems are compulsory DC schemes. So the TPA seems to be suggesting full compulsion (as opposed to auto-enrolment) into a DC scheme along with means-tested benefits. Unless I'm being thick that means it would suffer from exactly the same issue of contributions potentially counting for nothing as they point to in Personal Accounts.

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