The world’s largest economy was criticised by the International Monetary Fund due to its slow private sector growth and its $85 billion public spending cuts. The IMF is one of several organisations to criticise the country’s approach to reducing its public sector spending, which involves uniform budget caps across several departments.
The United States plans to reduce public sector spending by almost $1 trillion over the next ten years using blanket budget cuts referred to as a ‘sequester budget.’ The cuts will affect a wide variety of government departments, and have been criticised by the IMF and other groups due to their lack of targeted budget reduction.
The IMF contends that the United States government should focus its budget cuts on government departments that produce little immediate job growth. Putting the cuts on hold, the IMF claims, could produce a 3 percent growth rate for the US this year – a significantly higher figure than the 1.9 percent growth the organisation predicts.
Current budget cuts planned by the United States reduce spending evenly from a wide range of government departments. The IMF claims that budget cuts should focus on reducing pension and healthcare spending, while increasing the amount spent on major infrastructure projects and education.
The organisation claims that reducing spending across the board will limit medium-term economic growth, as departments responsible for large infrastructure projects struggle to deal with reduced spending abilities. Despite its criticisms, the IFM gave the Federal Reserve a positive review for its continued quantitative easing policies.
The IMF has forecast growth of 1.9 percent for the United States during 2013, and a growth rate of 2.7 percent in 2014. The group recommends the United States slow its austerity efforts and instead focus on making slower, reasonable cuts to public services that will not contribute to short and medium-term economic recovery.Read more
While a reasonable number of Britons are returning to work, employment figures indicate that the UK job market is still operating at pre-recession levels. Over 2.51 million Britons were still out of work, as of April, new figures from the Office for National Statistics reveal.
Over 24,000 people entered the job market in the three months to April, gaining a foothold in a growing market for workers in the UK. Despite the job growth, official unemployment figures pointed to an employment rate that hasn’t changed from its 7.8 percent reading – a figure that’s identical to early 2013 levels.
What’s more worrying than the flat unemployment figure, however, is the growing number of people aged over 65 that continue to work. Over one million people over the age of 65 still work in the UK – a figure that’s the highest on record. The Office for National Statistics began recording age-related job statistics in the early 1970s.
Other issues for the UK economy include a sluggish increase in remuneration, with the average worker’s salary increasing at a rate that beat inflation. CPA data shows that prices are increasing by approximately 2.4 percent per year, while salaries are up just 1.3 percent per year, as many workers opt to defer their bonuses.
The data brings to light an issue that could continue to affect the economy: as more professionals choose to stay in their roles well into their sixties, the number of new opportunities is decreasing relative to overall job growth. Many of the people most hurt by the change in employment demographics are recent university graduates.
In the last twenty years, the number of over-65s working has more than doubled. A large number of these workers will need to continue working until they are 70 years old, according to pensions minister Steve Webb.Read more
New figures being released by mortgage lenders indicate that the number of pensioners seeking equity release is rising significantly due to the insufficiency in their pensions. According to Just Retirement, retirees seeking this type of mortgage are from a broad scope of retired Britons who are looking to subsidize their paltry incomes.Read more
Recently Prudential released figures in regards to pensioners that are quite alarming. According to their data, one out of every six people reaching retirement this year will be relying solely on Government to survive as they have no pension from their place of employment. The report further states that the average person retiring in Britain will rely on one-third of their income from Government.Read more
Pensions March 24, 2012
This year the elderly have taken rather many setbacks in terms of services being offered. As reported earlier in the year, government is pushing elderly patients through hospitals and releasing them before they are truly ready. Now the Chancellor hinted that in his White Paper to be released, a new system will be launched to care for the disabled and elderly.Read more
Within the last year there have been many changes to pensions, public and private, but the biggest hit to date has been the new state flat rate pension which is currently under fire. Experts are stating that the average worker who could have expected a full pension upon retirement will now get a smaller amount.Read more
Pensions February 26, 2012
In addition to all the controversy of late on the cuts in pensions within the public sector, doctors have now gotten into the foray. Leaders have voted in favour of balloting for industrial action. Changes to doctors’ pensions have the medical profession up in arms and relations will between government and doctors are at an all-time low.Read more
Although government provided a framework to pensions prior to the holidays, both NASUWT and NAT have refused to sign onto those reforms. These are the two biggest teachers’ unions in Britain and both are demanding that further changes be made.Read more
So you’re an employer operating in the United Kingdom with at least one employee. But are you aware of the coming changes to pensions, and how they’ll directly impact your business? If you don’t know about automatic enrolment, for example, or staging date, then you need to get to grips with the forthcoming changes, as a matter of priority. They’ll affect you, so don’t put things off. Start getting clued up now!
The first point to take on board is that you, the employer, will be legally responsible for enacting the new changes, which will begin to come into force for larger employers in 2012. Firms with fewer employees will have a bit more time, but not much more.
The terms ‘worker’ and ‘eligible jobholder’ are at the heart of the changes. What is a worker? A worker is someone you employ who earns the national minimum wage. This can also include contract and agency workers, and apprentices, too. You may already offer them some kind of pension arrangements. Maybe not. Under the new arrangements, you’ll have to explain what pension scheme you’re offering and give them all the opportunity to join it.
Eligible jobholders are employees who earn more than minimum wages and are aged between 22 and the state pension age. They must also ordinarily work in the United Kingdom. Under the changes, eligible jobholders must be automatically enrolled by you into a pension scheme which meets certain criteria. Once enrolled – and only then – can they then choose to opt out of the pension scheme. Of course, you as the employer will be legally required to make a contribution towards the scheme.
Every employer in the country will be given a date when all changes have to be in place. This is called the staging date. The bigger the company, in terms of the number of employees it has, the sooner it’ll have to make the changes. October 2012 is the deadline for the largest employers. All employers, no matter their size, will have to have completed the changes by 2016. The government will contact companies anything from six to 12 months ahead of their own particular staging date.
If you’ve not already done so, you’ll need to think about the sort of qualifying pension scheme you are going to provide. Then you’ll have to know who and who are not eligible jobholders in your company. When the day arrives, all eligible jobholders will have to be automatically enrolled into the scheme. They must be told they’ve been enrolled into it and that they have the right to opt out of your chosen pension scheme. Companies must then tell the government about the scheme chosen and how many employees are in it.
A word of caution here because there are certain things you must not do, such as encouraging employees to opt out of the pension scheme. You must not dangle incentives or benefits in front of job seekers in return for them opting out of the scheme. And you must not disadvantage an employee in any way because of automatic enrolment.Read more
Pensions October 24, 2011
As of next year employers in the UK will not be allowed to give employees the option to choose between pay rises and pension plans. According to the new rules, businesses will be forced to enrol all staff in workplace pension schemes as of October 2012.Read more