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Plans to pass test

Raising the trivial commutation limit and introducing a pension income disregard were two means-testing solutions put forward at the Pensions Policy Institute seminar last week.

Delegates heard proposals to lift the trivial commutation limit from £15,000 to £30,000, increase the capital disregard for pension credit from £6,000 to £10,000 and raise the upper capital threshold for council tax benefit and housing benefit from £16,000 to £50,000.

PPI research director Chris Curry said people renting in retirement and women who have taken time off work to care for children – two groups identified as being at risk – would be better off under the proposals.

He said: “A woman who has taken time off caring for children would have a pension around £22,000 so could trivially commute under the new option. If she takes the whole thing as a lump sum, less will be taken into account for benefits so she has a clearer incentive to save.”

The pension income disregard option, suggested by B&CE Benefit Schemes, would allow individuals to keep £12 a week of pension income without it affecting their entitlement to means-tested benefits.

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England vs Australia: pensions

Well, the cricket season is here, and England and Australia are stepping up to the wicket. Although we compete with each other in the sporting world, when it comes to pensions, Australia’s pension programme is held up as a model for our auto-enrolment initiative. Auto-enrolment was introduced because people weren’t saving enough into their pensions, and it is still early days but signs are positive. However, in Australia, saving into a pension is compulsory, and in fact employers are the ones who have to pay in. Employees in Australia can make additional contributions into their pensions, but they don’t have to. Should the onus be on the employer or employee to save? Well in the UK we think it’s both, but to get ‘adequate’ savings for retirement it’s the employee who has to pay more in.

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