Cicero Policy Briefer

Issue 1, June 2006

It's all about my legacy:

Cicero analysis of the Pensions Reform White Paper
‘Security in retirement: towards a new pensions system’

By Iain Anderson

The UK Prime Minister led from the front as part of the publication of the Pensions White Paper, claiming the package to the “biggest reform of welfare for a generation”.

And to be fair to the PM, the much-leaked package is an extremely ambitious series of proposals which encompass the thorny issues of tackling means testing alongside re-introducing the link to earnings and raising the retirement age over time for the Basic State Pension.

The Government has also taken on board much of Lord Turner's blueprint for the creation of a National Pensions Savings Scheme, or Personal Accounts as they look set to be dubbed from now on—with implementation set to be aligned with the State Pension reform in 2012.

Of course, much of the political attack from the Conservatives and the Liberal Democrats reflects the truism that this package is 'jam tomorrow', and focuses again on the Blair/Brown dynamic.

The handover of power from the Prime Minister to the Chancellor is still the most likely scenario. This event, which we predict which will happen in the early summer of 2007, is set to have a key bearing on the pensions package. At its heart will be the commitment of any new Prime Minister to the wider reforms.

The key political questions which remain in play will be: What effect will the Comprehensive Spending Review—set for summer 2007—have on the State Pension reform package? And secondly, what will the timing be for the planned second bill to introduce Personal Accounts? If Brown opts to go for an early election in 2008, the legislation to create Personal Accounts might get delayed until the Government manifesto.

So the politics of pension reform remains firmly in play. But the Prime Minister can start to point to his pensions legacy—on State Reform at least.

Iain Anderson can be contacted on +44 (0)20 7665 9532 or click here to email.

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