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UK minister sets five key tests for pension reform

UK - New pensions secretary John Hutton says any pension reform must past a five-point test.

The term is reminiscent of Chancellor Gordon Brown's five tests governing the UK's joining the euro.

"Any plan to reform the pensions system must pass five key tests that will secure its longevity and sustainability," Hutton said in a speech at the Institute for Public Policy Research in London.

Any reform must promote personal responsibility, and be fair, affordable, simple and sustainable.

"As my predecessors have made clear, the primary responsibility for security in old age must rest with the individual and their family," Hutton said.

"The state must provide a floor below which no-one should fall but it must also allow everyone the opportunity to build a decent retirement income."

"If we are to achieve a lasting pensions settlement for the 21st century then I believe that any long-term package must be fair and simple to understand. But it must also be affordable to the taxpayer and therefore sustainable.

"Any new arrangements must stand the test of time and be flexible enough to adapt to the changing needs of tomorrow's society. We do not want to be in a position where what is implemented today is uprooted and changed by different governments tomorrow."

Hutton said the government would approach the forthcoming Pensions Commission report with an "open mind" and seek to secure a consensus across all parties in the future.

The comments come amid press reports that Brown reckons the Commission's recommendations are too expensive.

Hutton said: "We approach this debate with a genuinely open mind. This is the start of the debate, not the end of it.

"Generations of progressive politicians have risen to the challenge of ensuring that the State provides a foundation for security in old age.

"I believe it is now our turn - to see the scale and depth of the challenge and to rise to it. Government cannot solve the pensions challenge on its own.

"Instead we must work together to build proposals which will pass the tests of personal responsibility, fairness, affordability, simplicity and sustainability. And ultimately pass the most important test of all - securing our future with a lasting pensions settlement."

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