UK – “A more generous state pension in the long term at a later stage” are among the key proposals set out in the much-anticipated Pensions Commission report released today.
This means that apart from saving more, Britons would have to work to “at least 67” by 2050 to enjoy a state pension, which is currently under enormous pressure due to increased life expectancy and an ageing work force.
“Policies which over time will make state pension provision more generous and less means-tested but with the state pension age rising gradually as life expectancy increases," formed part of the Commission’s two-pronged proposal for a new pension settlement.
Commission chairman Lord Adair Turner also outlined the establishment of a National Pension Savings Scheme (NPSS) at a London press conference this morning.
The NPSS would include auto enrolment with the right to opt out, a minimum employee contribution of 5% and a “modest compulsory” matching employer contribution of 3%.
Turner responded to questions about the possibility of employers “shepherding” employees out of such a scheme, by reiterating the importance of keeping employer contributions modest.
“There is no perfect way forward but the danger is relatively limited,” he said.
According to Turner, the Commission’s proposals would not trigger a dramatic rise in public spending over the next 15 years. However, increases would be required after 2020.
The recent widely publicised political wrangling between Turner and Chancellor Gordon Brown, especially regarding the affordability of the proposed reforms, was played down today by the Commission chairman.
He stated that he and Brown had enjoyed a “perfectly sensible discussion” on the report.
Turner said it was “absurd” to question whether any politicians or commentators agreed or disagreed completely with the 400-page report. He added: “We need broad debate.”
“It is wrong to talk about a crisis of pensioner income today, but the problems in the UK’s pension system will grow increasingly worse unless a new pensions settlement for the 21st century is now debated, agreed and put in place,” said Turner in a press statement.
During the conference, he said the possibility of government broadly instituting the report’s proposals was “high, but probably not as good as it should be”.
Turner stated that the new pensions system – if approved – would be up and running at the earliest by 2010.