Pensions Awareness – towards a happy and secure old age

2 08 2008

It’s not just about retirement

As people live longer, and the law against age discrimination makes it possible for older workers to stay in employment, the experts predict that more and more people will be continuing in paid work for longer. But this doesn’t mean that pensions are less important – on the contrary.

To start with, the decision to work beyond the age we normally associate with retirement should be in the hands of the individual person, and that can only happen if people have real financial alternatives. In addition, and partly related to the kind of work involved, advancing age can present health issues which prevent people from working, or make it preferable to work fewer hours – in these circumstances, people need enough financial security to be able to step back from work at a time and in a way which suits them.

Occupational pensions – still a good deal

Many companies where Connect members work have their own pension schemes, which are funded by the employee and the employer jointly. Anyone who started work at a company with a pension scheme before 1987 will have been enrolled into the scheme automatically and will probably have continued in some pension plan, even if they have moved company. But since then, pension scheme membership has been optional, and so much publicity has been given to pension schemes in difficulty in recent years that there’s a real danger of younger people opting out and therefore losing the potential advantages of being in their employers’ pension schemes.

Employees who join occupational pension schemes typically benefit not only from the additional funding put in by the employer, but also from avoiding or sharing the costs of fund management and investment advice and from the advantages of scale which come from being part of a larger total investment fund.

Campaigning for better pensions

Connect has been at the forefront of campaigning for better state pension arrangements in the UK, and for occupational schemes which will generate pension incomes which allow people to have a good standard of living in later life. A number of Connect members also give their time voluntarily to be trustees of their own pension schemes, to safeguard their colleagues against the problems which have arisen in those schemes which make the news.

One critical point where Connect believes there should be improvement is in many defined contribution (DC) schemes, where minimum contributions are set too low to have any realistic prospect of yielding a good pension and where employer contributions are typically much lower than in more traditional pension schemes. Connect is arguing for changes which would give people in DC schemes more certainty and security about the pension they will eventually receive. Connect is also campaigning to make it easier for younger workers to get into pensions, through imaginative measures such as flexing pension contributions over time and off-setting pension costs with deferral of student debt repayments.

You can see Connect’s latest submissions to the government’s continuing review of pensions at http://www.connectuk.org/connect_public/default.asp?id=1226. Where Connect has negotiating rights, the union is also pressing companies to ensure sufficient funding of employees’ pension arrangements.

Weblinks:

http://www.pensionsadvisoryservice@connectuk.org <http://www.pensionsadvisoryservice@connectuk.org/>

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/index.htm <http://www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/index.htm>

http://www.worksmart.org.uk/pensionsdoctor <http://www.worksmart.org.uk/pensionsdoctor>  (brief registration required)

Don’t forget to tell us if your contact details change or if you change where you work: http://www.connectuk.org/update

Asking members to join helps us have a greater impact. People can join online any time at http://www.connectuk.org/join

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