UK – Pensions Reform minister Stephen Timms today agreed the UK’s pension system needs simplification.
“It’s clear listening to business that simplification in pensions is key. I hope we are going to make more progress in this direction in the coming months and in the white paper,” said Timms.
He added that there was much work going on across government on simplification.
Timms was speaking at the Pension Policy Institute/Nuffield Foundation launch of ‘Shaping a Stable Pensions Solution: how pension experts would reform UK pensions’.
The report brings together the views of 79 pension experts from more than 40 organisations, who have participated in a series of discussions and responded to detailed papers on pensions policy over the past year.
According to a PPI statement, “This initiative confirmed the case for change and that change has to start with the state pension.
“Most pension experts believe that the complex state pension is not fulfilling the role that only a state system can: to guarantee that older people have sufficient basic income.”
According to the report:
- The current state pension system needs to change in order to guarantee against poverty in retirement more effectively.
- Extensive means testing forces a number of difficult policy trade-offs and is not sustainable in the long-term.
- Coverage of the state pensions needs to improve, with particular focus on improving gender equality in retirement income.
- Well encouraged and regulated, voluntary earnings-related provision on top of a reformed state pension could meet the objectives of a compulsory savings scheme.
- Working longer will play a key part in increasing retirement income.
PPI Director Alison O’Connell said: “There is no doubt that every pension expert want to see change in state pensions.”
The PPI report also states it is “unlikely” that government will achieve its long-term target of switching the proportion of pension income from 60/40 state/private to 40/60 state/private.
“The ’40:60’ measure may be an interesting policy indicator, but the state looks set to remain the majority provider of retirement income,” said the report.