Benefits Available for Sickness and Disability - Essay Example

The Pension Act of 2004 assists employers and employees in protecting members’ benefits, while the Financial Assistance Scheme provides help to those who might have lost out before the Pension Protection Fund was established. The Pension Protection Fund goes hand in hand with measures in the Act that primarily help employers to provide pensions. This change would, in effect, complement the radical tax simplification in this year’s Finance Act, which from April 2006 will replace today’s eight separate tax regimes with one single regime. The third key dimension of the Act would include a set of measures that will empower people to plan, work and save for their retirement.

Employers have a significant role to play in the pensions partnership. This role is one of providing access, information, and contributions to pensions for their employees. The workplace would be an effective environment through which people can save. The administration is more efficient and there would be tax advantages for the employer and the employee. The existence of a good pension provision helps staff recruitment, retention, and motivation. Another contributor to the pensions partnership is the Pensions Commission. It in effect would set up the publication of the Green Paper to monitor and independently review the private pensions and long-term savings systems.

As a result of ensuing consultation, the Secretary of State for Work and Pensions published ‘Working and Saving for Retirement: Action on Occupational Pensions’ [Cm 5835]. This publication focused increasingly on needs such as member protection which rank alongside other similarly significant themes. It presaged primary legislation across the areas consulted. Areas consulted would have included a Pension Protection Fund to compensate members of defined benefit and hybrid schemes whose employers become insolvent leaving the pensions scheme unable to meet its liabilities. The European Directive on the Activities and Supervision of Institutions for Occupational Retirement Provision was adopted in September 2003 for implementation by September 2005.
The Government wishes for people to make informed choices about how and when to save, and how long to work, so they receive the income they expect in retirement. The Government hopes to empower older people to improve their retirement prospects by keeping them active for longer periods. The current state pension age is 65. The age is set here so that no one is forced to work beyond that unless they want to. But, by tackling age discrimination and freeing people to work part-time while drawing a pension, it hopes to make working longer more attractive. There are plans to:
• provide a better option for people who choose to draw their State Pension beyond their State Pension age – including a new option to take a lump sum and use it in any manner.
• ensure that compulsory retirement ages are unlawful unless employers can show that they are objectively justified.
• allow people to continue working for the same employers while drawing their occupational pension.
• raise the earliest age that a pension may be taken from age 50 to age 55, to further the fact that extending working life can be beneficial for both employee and employer.
The Government aims to ensure the consideration that all people of working age have access to the relevant information and tools they need to facilitate planning for financial provision in retirement. As part of this policy, the Government is developing an online retirement planner scheduled to be launched in the Spring of 2006. The planner will further enable people to view and estimate their projected income, estimate the income they think they might require in retirement, and then calculate any shortfall and provide options to address this gap.
In addition, Simplicity, Security, and Choice: Informed Choices for Working and Saving, in the Publications section, outlines simple but necessary steps to empower people to take control of their retirement planning. It is aimed at fostering an increased awareness among people of working age about actively and regularly reviewing financial planning for retirement. It aims to allow a better understanding by the individual of the importance of long-term savings, the value of savings they already have, and an awareness of any shortfall in their financial expectations for retirement.
We are also working with employers to encourage employees to save more and for longer. The Government believes that employers have a crucial role to play as providers of, and contributors to workplace pension schemes and as a source of information about pension options. We, therefore, carried out a pilot study in the Summer of 2004 to evaluate the effectiveness of providing different forms of pension information and advice in the workplace. We would also be working with pension providers and employers to evaluate a range of joining techniques to maximize membership in workplace pension schemes. One of the techniques we are evaluating is Automatic Enrollment, where employees automatically become members of their employer’s scheme but can choose to opt-out. The findings from both of these studies will be available at the end of Summer 2005. Read More