Dear Editor, As company pensions falter, only the state can offer security in retirement.
Britain’s biggest pensioner organisation, the National Pensioners Convention, has called on the Government to strengthen the state pension system in light of the latest reports casting doubt on the future of decent company pension schemes.
The call comes as Aon announced it was cutting its pension contributions from 12 per cent to six per cent and figures reveal that pension fund deficits now affect 64 per cent of the country’s 200 biggest pension schemes.
The NPC has criticised successive governments for relying on good quality occupational pensions as a way of avoiding having to pay a decent state pension.
But this approach is now unravelling:
At least 75 per cent of final salary occupational pensions have closed to new entrants;
The current economic crisis is estimated to have wiped £200billion from pension funds;
The average private pension pot will eventually give a single man of 65 an annual income of £1,960;
A pension pot of £100,000 will give a yearly sum of just £4,500;
Up to nine million existing workers have no pension provision other than the state.
The NPC is calling for the state pension to be set above the official poverty level of £165 a week for all men and women and linked to earnings or prices (whichever is the greater).
This could be financed through a number of measures, including using the surplus in the National Insurance Fund, which currently stands £47billion, or abolishing the upper earnings limit on national insurance contributions would raise at least £8billion a year
Neil Duncan-Jordan, NPC