UK facing 5 years of pensions 'turmoil'

A top industry analyst has followed up comments by the current pensions minister by predicting that UK pensions are facing five years of confusion.

Steve Bee, head of pensions strategy at Scottish Life, was speaking after Stephen Timms revealed some details about the government's plans for the UK's pension industry in an interview with The Times this week.

In his first interview since becoming pensions minister, Mr Timms said: "2010 is when the state pension age starts to rise for women and I hope the changes we introduce will be in place by then."

Currently men receive their state pension at 65 and women receive theirs at 60. From 2010 the state pension age will rise steadily until it reaches 65 in 2020.

But Scottish Life's Mr Bee points out that changes made this quickly mean the population will not be able to make retirement plans with any certainty for a full five years.

"It clearly looks like we are just about to enter another five-year period of turmoil, where fundamental pension issues are once again thrown up in the air, resulting in further radical changes at the end of it all," he said.

Mr Bee also questioned whether is was wise to have further change following on so soon after A-Day (full story).

"Given that we're just about to come to the end of a prolonged period of uncertainty and change for pensions in the UK, with retrospective changes to the tax legislation on pensions coming into force next year [on A-Day], I wonder if it would be a good time for us to have a bit of a breather?" he said

"It's going to be challenging enough, I think, for all those affected by retrospective taxation to be advised in good time, without us having to worry about how it will all be amended by the next wave of legislation."

However, the current UK pensions gap - estimated by the FSA as £37 billion a year - and not the state of the pensions industry would appear to be foremost in the minister's mind.

"I think there is a very wide understanding that change is needed," Mr Timms told The Times. "It's setting quite an ambitious pace, but this isn't an area where it makes sense to hang around."

The pensions commission will report to government at the end of November with proposals to plug the UK's pensions gap.