29 May 2006
Last week's publication of the Government's White Paper on Pensions was broadly welcomed by pensions campaigners and politicians of all parties. It adopts most of the package proposed by Lord Turner in his Pensions Commission. But the devil will be in the detail.

The pensions crisis in this country is part demographic: there are more of us and we are living longer; and part political: tax grabs from occupational pensions and more means testing has reduced incentives to save. We cannot go on as we are.

A new system of paying for our retirement has to be devised, which the public will be able to trust. This is why a political consensus on the way forward is so vital.

Many issues are raised by the White Paper which need answers. First of all is the question of 'affordability', which Gordon Brown has used to stall re-linking basic state pension increases to rises in earnings. At present the Chancellor seems to be reserving the right to decide whether and when to restore this link. His track record of being judge and jury of his own rules does not fill me with confidence.

Fairness is a big issue in aligning public and private sector pension rules. Why should public sector workers be able to retire at 60 when the rest of the population will retire at 68?

The National Pension Savings Scheme will raise payroll costs for employers by 3%, which may reduce wage increases. Young people starting a family, may be better off reducing debts than saving 4% of take-home pay into this scheme. Potential Government mis-selling of this scheme to vulnerable groups also needs to be addressed.

The Work & Pensions Select Committee on which I sit, is reviewing the Government's proposals and will report in July, hopefully with some of the answers.