The long-awaited review of the public sector pension situation has been revealed today with former Labour Cabinet minister Lord Hutton leading the way. There is speculation that David Cameron used Lord Hutton, and his many Labour contacts, so that the release of today's report would be smoothed in some way with regards the expected backlash from opposition parties.
The release of Lord Hutton's report into public sector pension schemes perfectly illustrates how an explosion in the number of public-sector workers in the UK has contributed to an ever-growing liability for UK taxpayers. The vast majority of public-sector pension arrangements are based on an employee's final salary which can often bear little or no resemblance to the potential investment return on the pension funds in question. So why is there such a big difference between the private sector and the public sector pension setup?
Lord Hutton has today released his long-awaited review of the UK public sector pension arena with a suggesting that public-sector employees will need to contribute more in the future, work until they are 65 and their average salary over their career should be used as opposed to their final salary when calculating pension payments.
Unions in the UK are today positioning themselves for a major battle with the UK government in relation to public sector worker pensions. A report into the public sector pension situation is likely to see public sector workers facing an increase in pension contributions, the retirement age extended to 65 and possibly a switch to an average career earnings figure as opposed to a final salary earnings figure.
Lord Hutton, the former Labour cabinet minister, is currently looking into the public sector pension set up in the UK amid speculation he is set to recommend major changes. It is believed that the report, which is due soon, will suggest that a new formula should be found to bring public sector pension arrangements more into line with those in the private sector. This has been something of a bugbear of the UK population for some time with the gap between private sector pension payments and public sector pension payments widening over recent years.
It is becoming more and more apparent that the gap between the haves and the have-nots is set to grow dramatically in the UK over the next few years. Already we have seen signs that those with assets will need to downsize and dispose of some of these assets to fund their retirement, while those who have relied upon the state for many years will still be supported in the future. So have you thought about your pension?
A report by LV suggests that 1.2 million people in the UK will be forced to sell their homes and downsize to fund their retirement. When you bear in mind that the vast majority of people in the UK will have paid significant taxes by the time they look towards retirement, is it fair to expect those who have done fairly well for themselves to reduce their assets in retirement?
A report by LV has thrown a very dark shadow over the UK retirement sector with a suggestion that 1.2 million people will in the future need to sell their homes to fund their retirement. It would appear that more and more people over 50 are now dependent upon their homes as an asset for the future and will be forced to downsize in due course.
Data released by the Office for National Statistics show that occupational pension schemes have significantly reduced poverty in the UK since the early 1990s. However, there were other interesting statistics issued by the Office today which include the fact that the top 20% of earners in the UK earn four times that of the bottom 20% of earners in the UK. This difference between the rich and the poor has increased dramatically over the last few years even under a Labour government.
A report by Barclays Bank has today indicated that around 60% of wealthy individuals in the UK have no plans to retire and will indeed work on into their later years. It would appear that more and more the traditional retirement age is being cast aside and indeed the concept of retirement is something which many people are not willing to consider.