The Week Unzipped: Older employees 'face loss of perks' at work

Published on Thursday 29 July 2010 15:49

PENSION reform remained at the top of the government's agenda last week with changes to the retirement age and tax regime.

From next October the default retirement age will be scrapped, making it unlawful for firms to ask staff to retire at 65.

Some organisations have welcomed the move, which they say will boost productivity and allow employees freedom to shape their careers. However, employers are concerned that they will face difficulties managing elderly staff who fail to understand they are no longer up to the job.

John Cridland, deputy director-general of the CBI, said: "A default retirement age helps staff think about when it is right to retire, and also enables employers to plan more confidently for the future. For employers, these proposals could make workforce planning and providing some employment benefits, such as critical illness cover, next to impossible."

Employee benefit firms have also warned that employees who do continue working may not be included in perks available to other staff such as medical or life insurance, as group contracts will be written until 65. Pension arrangements may also have to be reviewed.

Elsewhere, the government has proposed a limit of 40,000 on the amount of money people can put tax-free into their pension, which could land even those on modest salaries with an unexpected tax bill.

Unions have called the proposals another nail in the coffin of final-salary pension schemes. They claim the top earners in the private sector will gain from the changes while many middle-earning public sector workers will lose out.

However, the National Association of Pension Funds says the changes have simplified pension planning and will encourage higher earners to stay in their workplace pensions, so helping protect pensions saving for all staff.

Finally, for some good news, Aon has calculated that the plan to uprate final salary pensions annually in like with the Consumer Prices Index, rather than the higher Retail Prices Index, could wipe up to a quarter off pension fund deficits.

Blow for holiday lets

THOUSANDS of second home owners are to lose tax breaks on furnished holiday lets. Under new proposals, more than a quarter of holiday home owners will no longer be eligible for the tax benefits.

Homeowners will need to secure more bookings and will no longer be able to offset their mortgage costs against the personal income.

House prices fall

HOUSE prices fell in July, bringing the annual rate of house price inflation down from 8.7 per cent to 6.6 per cent, according to figures from Nationwide.

Pound not so sound

NEARLY two million fake 1 coins were returned to the Royal Mint last year, according to figures from the Treasury.

The number of counterfeit coins in circulation is rising, with 23 times more coins seized in the past 12 months compared with six years ago. An estimated one in 36 1 coins is a fake.

Signs of counterfeits include a poorly defined ribbed edge or an indistinct design of the Queen.