The Pre-Budget Report (PBR) presented by Alistair Darling yesterday (December 9th) contains several potential "dangers" for pensions, an independent expert has said.
Dr Ros Altmann, a former government pensions adviser, claimed that the apparent cap on public sector pension costs contained in the report are "misleading" and that the expenses will rise by 45 per cent in 2010-11, compared with 2008-09.
She said that the cap only applied to the longevity of those saving into public pensions and does not cover potential increases in costs related to interest rate changes or inflation.
"Don’t be fooled by the pretence of a cap on taxpayer contributions to public pensions – the cap is not a cap at all," Dr Altmann added.
"We urgently need an independent review of public sector pension costs and a proper comparison between arrangements for public and private sector workers."
Pensioner finances could be boosted by other measures contained in the PBR, with extra funding for Warm Front insulation grants and a new "boiler scrappage" scheme both having the potential to lower gas and electricity bills.
However, the PBR also includes plans to reduce tax relief on pensions for higher earners.
Damage to a pensioner’s income caused by this change can be reduced if they unlock value from their property via a home reversion plan.
Posted by Claire Ford
