UK - Government plans for pensions reform have been criticised by a leading economist for lacking an economic overview.
In a paper, entitled ‘Pensions’ Crisis! What Crisis!’, the economist Robert McDowell says the government has not properly considered the beneficial effect on the economy of it increasing its spending on pensions.
And he points out that current government spending on pensions is lower in most other European countries.
He said: “The truth is that doubling the provision in government spending for pensions is affordable by the economy, would be good for the economy and could reduce pensioner poverty dramatically.”
He added that the effect on tax rates would be small – as pensioners would be taxed on any additional income they rec-eived – and that the effect could be “zero” if the government made more bonds available.
This would be very cheap for the government as it currently holds around £125bn of pension money in gilts that it could market to release additional cash for pensions.
But others in the industry have questioned this approach.
Standard Life senior technical manager John Lawson said that any additional income raised by the government should be used to meet projected deficits in future tax revenue that would arise through a future decline in the working population.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers