12 February 2002

UK minister urges pension reform across Europe

Speaking at the Royal Institute of International Affairs: European Pensions 2002 conference in London, he said: 'Across the European Union, there are currently four people of working age for everyone aged 65 or over. By 2050 the UK will have 2.5 people of working age for every person of retirement age. Other countries in Europe will be even more affected.

'This is a major challenge for systems across Europe. Reform is needed to ensure that we establish a fair balance between what is expected of Government and the responsibility of the individual to save for their retirement where they can.

'Europe is currently working on a draft directive on the regulation and investment practices of 'Institutions for occupational retirement provision'. While we welcome this Directive it is essential that it does not lead to a reduction in the provision it was seeking to promote by restricting the investment choices available to schemes.

'We also welcome the work on pensions sustainability. The diversity of pension provision in Member States means that a complex and delicate balance needs to be achieved between financial and social objectives of pensions systems.'

While acknowledging that more needed to be done on tackling age discrimination in the workplace, Mr McCartney said that the Directive on Equality will remove unfair discrimination without stifling businesses with unnecessary burdens.

In his speech Mr McCartney also set out the UK Government's fundamental overhaul of the pension system. This included how the Government is fighting pensioner poverty through the Minimum Income Guarantee, Pension Credit and State Second Pension.

The UK Government has created the opportunity for helping people to save by introducing stakeholder pensions - a new low cost and flexible pension option.

Mr McCartney said: 'We are investing in improved and modernised services that are easier for customers to use and that make the best use of technology. The establishment of the Pension Service will provide advice and support for today's and tomorrow's pensioners.

'We are also encouraging everyone to understand their pension options and to make provision for their old age. We have introduced combined pension forecasts that will give individuals details of their current and projected state and private pension entitlements.

Mr McCartney also set out the Government's objectives to make sure that the regulatory framework governing private pensions is as simple as it can be and that costs are kept to a minimum. A comprehensive review is now underway to identify and recommend options for simplification while maintaining protection for pension scheme members.

Notes for Editors

1. From April 2002 the State Second Pension will help 18 million low and moderate earners, carers and long-term ill and disabled build up additional state pension for the first time.

2. From April 2002, the UK Government will be spending an extra £6 billion a year in real terms on pensioners.

© Department for Work and Pensions