Connected Research

Union policy research in the 21st century

Posts Tagged ‘Young people

Labour photo of the year

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LabourStart has been running a photo competition to nominate the 2009 labour photo of the year and, some 3,200 votes (and, so far, more than three times as many views) later, the winner has been announced.

You can also still view the other photos nominated here.

A good competition – and a very worthy winner: it’s a photo that challenges.

Written by Calvin

03/11/2009 at 1:14 pm

Aviva’s pensions proposals – what?

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Aviva, the insurance and savings provider, has released a set of proposals on pensions which it believes will help encourage retirement savings.

While being happy with anything that contributes to greater pensions awareness and which also encourages people to save more for their retirement, I believe this set is far more likely to lead to confusion and misunderstanding than to point a possible way forward:

– it is a mystery how allowing people early access to their pensions savings will help them save for their retirement, even where the rules of doing so are drawn up ‘in conjunction with consumers, the industry and HMRC’. People might well manage their savings within a one-year timeframe – that’s one reason why they are likely to be saving insufficiently for their  retirement. At the same time, allowing early access to pensions savings, by definition, cannot possibly assist people with their retirement savings

– harmonising tax relief at 30% will not add to the extent to which people understand how tax relief works for them – quite the opposite, it is likely to undermine it since, if there is anything that is understandable about the system, it is that you get tax relief on your pension contributions at your marginal rate. Higher rate taxpayers may gain a disproportionate share of the tax relief currently available – and you would not find a union a fair proportion of whose members are themselves higher rate tax payers to argue for a cut in tax relief – but, while we would probably agree that sensible incentives do need to be provided to encourage the lower-paid to save, doing it through the tax system probably ain’t one of them. And the transitional issues involved, in the way described by Aviva, are huge

– introducing alternative work-based savings plans is not a rational way to deal with the evident disengagement of young people from the pensions world. Work-based savings plans already exist – we currently call them pensions – and, while I would agree that we need to develop a new language based around workplace savings to deal both with that disengagement and with the distrust which young (and not so young) people have towards pensions, there is no evidence that developing a whole new raft of savings products has anything to contribute to this – in fact, probably the reverse. Language does no doubt need to be simplified but, above all, what needs to be done to re-build people’s trust in pensions is to get employers paying a fair rate into schemes

– simplifying the state pension scheme has much to commend it and it is a disgrace that only three out of five people approaching retirement know about the Pension Credit system and that, of those who are entitled to benefits, only one-third actually claim them. Introducing a flat-rate pension around the current level of the basic state pension plus Pension Credit is an interesting idea and would take many people out of poverty in retirement, but more work does needs to be done into how it would be funded: Aviva’s proposal to raise the requisite sums by new national insurance contributions for those above a certain income in retirement is, currently, insufficiently defined (and higher NI contributions, falling not just on employees, during the working lifetime is probably a better approach)

–  likewise, giving Personal Accounts holders an annual pensions statement which includes a forecast of state pension benefits is a sound, if perhaps rather marginal, idea which may well give people a better idea of how little they may be saving. The shock value of such things does help to focus the mind somewhat! Nevertheless, it remains true that it is the employer contribution (a minimum of 3%) into Personal Accounts that needs to be improved – this is simply insufficient and no amount of getting individual employees to accept responsibility for their plight can change that.

Like Aviva, Connect also wants to see ‘pensions to be built around the needs of the modern, more flexible workforce’. But, like for the workforce of 30 years ago, that’s based around delivering sufficient contributions into schemes, with a fair balance of contributions between employer and employee, and giving everyone involved a degree of certainty about what they are doing, why they are doing it and, if not about what they will get in retirement, at least about there being fair rules that surround them accessing their retirement savings in their retirement. 

If we could do all that thirty years ago, we can do it again now.

Written by Calvin

08/10/2009 at 5:44 pm

TUC publishes seventh Recession Report

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The TUC’s Recession Report – its seventh – was published today.

The Report contains the usual insightful analysis of a series of issues arising from the officially published employment and unemployment statistics: at the headline levels, the employment rate now stands at 73.6%, a decline from the 74.8% recorded in the first quarter of 2008; while unemployment – on the ILO measure – now stands at 7.1%, a rise from 5.2% one year ago.

National Statistics said this week that the recession during the last three calendar quarters of negative growth has added to unemployment at about the same rate as the recession at the start of the 90s and a little faster than the one at the start of the 90s. Nevertheless, the rising UK population has meant that the number represented by the growth in the percentage of the population who are out of work are higher than before.

In addition, the TUC’s Report includes a special section on pay freezes with the specific intention of counteracting the impression that no-one is getting a pay rise. The Report concludes that pay rises are certainly slowing and that there indeed some pay freezes, but that there are a number of contrary trends too – including National Statistics data which shows that average earnings excluding bonuses are still rising by around 3%.

The TUC correctly believes that a general policy of holding down wage rises in a recession would depress demand, thus exacerbating the recessionary problems, even though there are arguments in some firms, faced with particular and genuine difficulties, for prioritising job security over wage rises.

The special focus in this month’s Report is young workers who, the report comments, are being hit particularly hard by the recession in terms of the sharply rising unemployment levels. Shockingly, unemployment rates among young people aged 18-24 tend to be, for the same levels of educational achievement, over double what they are in the population as a whole. At the same time, the increase in youth unemployment has been double that of 25-49 year olds and treble that experienced by the over 50s.

The Budget contained some measures to prevent ‘a new generation of young people becoming a lost generation’ and that is no doubt the right approach – but, equally, it is clear that more does need to be done.

Written by Calvin

19/05/2009 at 5:12 pm