Alan Pickering, the chairman of the European Federation for Retirement Provision, has called for a dramatic increase in the basic UK pension and higher retirement age.
“In order that the private sector can work efficiently, the UK basic state pension needs to be increased dramatically over time,” Pickering writes in a new report. “By 2008, the basic and state second pensions should be amalgamated and the facility to contract-out should be terminated.”
The Watson Wyatt partner added that by 2025 the universal state pension should deliver a benefit of around 40% of national average earnings. By the same date the retirement age should be raised to 68.
The arguments are put forward in a paper published by the Adam Smith Institute, a free-market think tank. Pickering wrote the government commissioned report ‘A simpler way to better pensions’.
The Department of Work and Pensions rejects Pickering’s ideas, saying it already has a “balanced strategy”.
It says: “The government has made it clear that whilst it recognises the arguments in favour of increasing state pension age, the arguments against it are more compelling.
“Two thirds of men have already stopped work by the time they reach 65, so an increase in the state pension age would not deal with the core problem of working lives ending too soon.
“We have a balanced strategy to ensure pensioners share in the prosperity of the nation and have security in retirement.”
“We believe that these carefully-constructed proposals provide, at last, a firm foundation for politically deliverable pension reform that will actually get the nation saving again,” says Adam Smith Institute spokesman Matthew Young.
“After years of confusion that has undermined the savings habit, clear consensus is emerging about what government, employers and the savings industry need to do.”