UK - The UK's National Association of Pension Funds (NAPF) had today called for a radical overhaul of existing UK pensions terms, in a bid to increase pensions coverage but at the same time ease funding pressures on employers.

Under the NAPF proposals, companies would be able to create core defined benefit (DB) schemes and pension funds would be freed of the legal obligation to provide indexation and benefits for spouses.

The lobbying group also called for The Pensions Regulator (TPR) to be strengthened and given powers over group personal pensions that currently lie with the Financial Services Authority (FSA).
In a report entitled Fit for the future - the NAPF's vision for pensions, the organisation argued certain benefits, such as spouses' pensions and indexation, could be paid by DB schemes on a voluntary basis and said in the latter case they should be dependant upon each year's funding level.

It also argued members should at first only contribute to a basic, core DB scheme but should then be able to pick and choose which additional benefits they would like to pay contributions towards.

The report goes on to praise the National Earning Savings Trust (NEST) created by the UK government but cautioned that the current level of minimum contribution, set at 8%, needs to be increased. According to the NAPF's calculations, a contributions increase to 11% would be equal to a replacement rate of a third of salary, compared to 25% of salary at current contribution levels.

Launching the report, Joanne Segars, NAPF chief executive, claimed "the government's 2012 reforms are a major step forward and our proposals complete the task," while adding that the NAPF's proposals were "designed to create a pension system which is fit for the 21st century."

Further suggestions from the NAPF included the combining the basic state pension and state second pension (S2P), resulting in a yearly payment of £8,000 and in two million fewer people being means-tested each year.

The NAPF claimed this new Foundation Pension would make up less than 1% of the GDP by 2050, thanks to savings made in other benefit payments, and argued it would simplify the UK's pension system.

The creation of a Public Sector Pensions Commission was also proposed, with the aim of developing reforms for public sector pensions. The NAPF does not see the Commission's goal as cutting back benefits, but as raising private sector benefits to a level where the divide is not as significant.

The proposal for a public sector pensions Commission was welcomed by the TUC, and general secretary Kay Carberry hailed the NAPF's "serious and constructive proposal".

"While there are also some proposals that we do not support - public sector pensions are perfectly sustainable - this is a welcome contribution to debate," Carberry went on to say. "Pensions policy is one area where stakeholders try and work by consensus, and we very much hope that this can be sustained after the election whatever its result."

Tonight will also see the launch of a second consultation paper, with contributions from Baroness Patricia Hollis and Labour MP Jon Cruddas. In the report, entiitled A New State Pension, Baroness Hollis argues: "A new enhanced state pension, addressing pensioner poverty (particularly of women), floating pensioners off pension credit and     encouraging them to save, a pension that is decent, simple, transparent, and affordable, is an idea whose time has come."

Pension industry adviser Ros Altman, who also consulted on the paper, agrees. "We need proper radical reform and at last there is a head of steam that seems to be building up and I think that any politician who has got the vision to grasp this could really change round their political fortune," says Altman.

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