This week in pensions: 22-26 August 2022

Students across the UK received their results over the past week, reaping the rewards of the hard work they put in over the pandemic, having faced numerous disruptions over the past two years as they studied through lockdowns and much uncertainty.

But while many students will be feeling a sense of relief, further disruption could still lie ahead, with universities potentially facing 'unprecedented' strike action over pension and pay concerns.

The University and College Union (UCU) confirmed that 151 universities will be balloted over the next month on potential strike action, with one of these ballots focusing on changes to the Universities Superannuation Scheme.

Staff at Falmouth University have also voted in favour of strike action due to the creation of a 'two-tier workforce' that enrols new employees to a “greatly inferior” pension scheme.

Higher education is not the only sector making headlines amid pension concerns, however, as the issue of pensions taxation in the NHS has once again come to the fore, with government and party leader candidates facing growing pressure to address concerns around NHS waiting times and staffing difficulties.

Conservative Party leadership frontrunner, Liz Truss, for instance, recently stated that she would address pension tax issues that are leading to senior NHS staff retiring early, with reports that she is planning a series of reforms to try and halt the exodus of staff and encourage retirees to return.

Meanwhile, think tank Policy Exchange has called on the government to consider changes to the interrelationship between the Consumer Price Index (CPI) and the annual allowance (AA) for public sector pension schemes, suggesting that the reform could help address the issue of doctors seeking early retirement from the NHS.

Concerns over the cost of living have also persisted, with Ofgem confirming today (26 August) that the typical household energy bill is expected to hit £3,549 a year from October, placing further financial strain on household finances.

The impact of the cost-of-living crisis may already be being felt, as XPS suggested savers may be looking to their pension to meet increased income needs, after it found that the proportion of members transferring their pension had increased 41 per cent in July.

Support is needed though, as while XPS acknowledged that pension transfers can play a vital role, XPS’s Scam Flag Index revealed that 94 per cent of transfer cases showed at least one scam warning sign in July.

And although many in the industry are concerned over the impact of cutting pension contributions amid the cost-of-living crisis, households willl need to make cuts somewhere in order to make ends meet.

This backdrop has forced the pensions industry to reconsider how it is supporting pension savers amid the cost of living, with our latest blog considering how and when the industry should be looking to promote increased pension saving amid the current cost-of-living crisis.

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