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Sustainability key focus for government

Consultative approach appropriate

Commenting on the long awaited Department of Social and Family Affairs Green Paper on Pensions, Ian Mitchell, Managing Director, Deloitte Pensions and Investments said:

“There aren’t any shocks in the paper; but then it’s not a subject that lends itself to shocks and, perhaps learning from the ever evolving but rarely progressing pension landscape in the UK, the Department of Social and Family Affairs presents a paper that is about consultation and about buy in and sustainable long term solutions.

“The backdrop to the long awaited Department of Social and Family Affairs Green Paper on Pensions is one that reminds us of our coming of age.  One statistic in the Government foreword says it all – ‘According to new data in this Green Paper, the number of people of working age for each person age 65 and over will fall from 6 in 2006 to 2 in 2050’. That’s the demographics of a nation growing up.

“The document itself – all 254 pages of it – is one that asks us to think deeply about the ageing process, and to come to adult conclusions both about the kind of society in which we want to grow old and about how much we’re going to have to pay to provide it. 

“The key objectives remain the same: 1) to increase the basic State Pension to at least €300 per week by 2012  2) To secure retirement income from all sources for each citizen to at least 50% of pre-retirement income, and 3) to work hard in order to develop flexible responses to retirement. But a new word features strongly. Sustainability entrées in chapter 3 and reprises in almost all of the subsequent 11 chapters.  The reminder is always there that what might be sustainable when there are 6 people working to support one pensioner may not be so come 2050 and beyond.

“And so the chapters on Social Welfare Reform options, on increasing the scope for utilising Approved Retirement Fund (ARF) structures to provide post retirement income out from its current rather limited application, on the possibility of and potential infrastructures for introducing mandatory pensions, on the DB vs DC debate, and on the possibility of making the annuity market more competitive are all delivered in the context of sustainability. And the questions the paper asks us to answer are all thoughtful questions. All appropriate questions for a nation that’s growing older.

Everyone who plans to be around when they’re 65 should read this Green Paper.”

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