It has been just over a week since the UK comprehensive spending review, (CSR)), which was keenly awaited but with no surprises on the whole, except there were copious figures quoted and a time frame of 2014 / 15 to turn the country around. The upshot was work longer, pay more taxes, and suffer reductions in benefits and public services.
There was however a “double whammy” for men in respect of pensions with an earlier rise in the retirement age and the potential for a move by annuity providers to remove the differential in providing higher annuity rates to males who have the same sized “pension pot”, as females on the basis that men are likely to die sooner. This is a result of a European Court of Justice opinion that “insurance companies may not charge men and women different rates for products”. Once this opinion is ratified in EU law it could have significant implications for life insurance premiums, transfer values and member options.
The private sector over the last eighteen months has suffered the full impact of the economic downturn, recession and low growth “recovery”, but things are getting worse with the cuts announced in the CSR and a view that the private sector will have to absorb the fallout in people and cuts in services in the public sector. In addition, public sector workers will have to increase their contributions and possibly move from a final salary to average salary scheme………..but this is a half measure. The private sector has already, over a number of years, moved away from final salary to money purchase schemes and increased contributions have followed for employees. Why can’t the public sector make the change? More importantly, there should be legislation that does not allow any government to utilise public pension funds in other areas of public sector spending, thus protecting public sector workers.