PENSION REFORM IN THE U.K

As people live longer and birth-rates fall, many countries are facing up to the problem of how to finance pensions for an ageing population. In the United Kingdom, a Pensions Commission reported on what the problems are and how the government could tackle the situation. This report from ILO TV.

Date issued: 31 January 2005 | Size/duration: 00:02:35 (3.37 MB)

The seaside town of Bournemouth. In Britain it’s known as a favourite place to spend your retirement.

But today’s workforce is in the middle of an unprecedented pensions debate.

People are living longer and the government is worried about how it will finance pensions in the future.

The chairman of the independent Pensions Commission, has identified four choices.

Adair Turner: Chairman, Pensions Commission

EITHER people of that age all are going to be pensioners and they are going to become poorer relative to the rest of society, OR the rest of society is going to have a higher tax burden to maintain their pensions, OR people are going to have to save more on an individual basis to support themselves in old age. OR, the average age of retirement is going to have to go up.

For some employees, working longer is the answer.

John Brook planned to retire when he turned 65, the usual retirement age.

Now he feels he can’t afford to stop work. He had a private pension, but the poor performance of the stock market means it’s worth half what he expected.

Many women are not entitled to a full state pension because they didn’t pay enough contributions.

The Trades Union Congress has highlighted the problem.

Kay Carberry: TUC assistant general secretary

The TUC is very concerned that we’re heading towards a pensions crisis in this country and we’re concerned that women are losing out much more than men are.

If nothing changes, nine to eleven million British people are going to be poorer in retirement than they expected -- poorer than their parents were.

In Bournemouth, the baby boom generation is only now waking up to what the future may hold.