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Is it time to link the state pension to earnings again?

As we approach the centenary of the state pension in the UK union leaders are this morning calling for the restoration of a link between pensions and earnings. This link was taken there many years ago as a means of reducing the liability of the state as earnings continued to rise during the 70s and 80s. There have been a number of calls to put the link back in place which would see pension payments increase by the average earnings increase per annum.



However, despite pressure being placed on the government by the unions it would seem unlikely that this link will be restored in the short to medium term with a serious requirement to reduce capital outlay and retain as much funding for public services as possible. The pension issue in UK has taken a serious downturn over the last few years with a large number of private sector final salary pension schemes falling by the wayside while public sector pension scheme liabilities continue to increase at massive cost to the taxpayer.



The pension issue in the UK is however far better than that in many European countries such as Italy which is literally struggling to cover current and future pension payments. If as expected the EU state is created over the next few years there are concerns that the UK government, as well as many other counterparts throughout Europe, will be forced to bailout countries such as Italy.

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