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Pensions reform 'in Queen's Speech'

A radical shake-up of workplace pensions is set to be unveiled in the Queen's Speech this week, with supporters saying retirement incomes could be boosted by thousands of pounds.

For the first time, staff will be able to put their money into Dutch-style "collective pensions", shared with thousands of other members.

The so-called "mega funds" are regarded by many as a better investment because they are less vulnerable to variations in the stock market.

The controversial changes, which could be introduced as early as 2016, are intended to deliver better value for pensioners.

Pensions minister Steve Webb previously described the collective schemes as "some of the best in the world".

He told The Sunday Telegraph that the key advantage was "pooling risk" of investments performing less well than expected across large numbers of people of different ages, "just like car insurance or the NHS".

"It gives people greater certainty and probably better value," he said.

"There are some quite strong claims made for how much better it is. People say, you will get a 30% bigger pension.

"You might, you might not, but clearly it is pretty unambiguous that you will get a more certain outcome and potentially a better one."

However, critics of the collective pension model have warned that, unlike with a fixed annuity, pensioners only have a "target" for what they will receive in retirement instead of a guarantee.

If the collective fund's investments fail to generate the expected profits, pensioners could in some cases see their incomes fall.

The plan is based on schemes operating in the Netherlands and Scandinavia. However, Dutch politician parties have recently called for collective pensions to be scrapped in favour of British-style individual pensions.

The workplace pension shake-up is set to be steered through by the Department for Work and Pensions.

Meanwhile, the Treasury will take responsibility for a new Bill sweeping away tax rules that have prevented pensioners taking more than a quarter of their savings in a cash lump sum.

Other legislation expected in the Queen's Speech includes:

:: A crackdown on highly paid civil servants and NHS executives receiving large redundancy pay-offs before taking similar jobs within a year.

:: Tax free childcare for families where both parents work, worth up to up to £2,000 per child.

:: An infrastructure and competitiveness Bill will change trespass laws to allow shale gas exploration firms to drill beneath private property without needing the owners' permission. It is also expected to contain measures to boost further oil and gas developments in the North Sea, and to pave the way for more major roads to be built.

:: A "Recall Bill" allowing voters to sack their elected MPs if they are not up to the job is expected to be included, although it has been subject to disagreements inside the coalition.

Amid continuing opposition from the Liberal Democrats, there will be no legislation for a referendum on Britain's membership of the European Union.

Instead, David Cameron is likely to promise he will use the Parliament Act to overrule the House of Lords and force a Tory backbencher's Bill into law.

Critics have accused the coalition of running out of steam with a year to go before the general election.

Labour released figures claiming the coalition had become a "zombie government" with MPs debating fewer government Bills last year than at any time since 1950.

Labour leader Ed Miliband said a record number of unfinished Bills, carried over from the previous parliamentary session, demonstrated that "ministers have run out of ideas".

Shadow Treasury chief secretary Chris Leslie said: "The Government is acting belatedly to deal with a problem of its own making.

"Over 4,000 people have been made redundant and rehired in the NHS on David Cameron's watch.

"Under this Government £1.4bn of taxpayers' money has been spent on redundancies in the NHS alone.

"While billions have been wasted on a reckless reorganisation of the NHS, waiting times have gone up and it's got harder to see a GP."


From Belfast Telegraph