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New State Pension sets a clear foundation for retirement

04 April 2011

The National Association of Pension Funds (NAPF) backed plans to overhaul the state pension set out in a Government Green Paper today (Mon).

Joanne Segars, NAPF Chief Executive, said:

“We’ve endured one of the meanest state pensions in Europe for far too long. This is a turning point for the UK’s pension system. Millions will enjoy a simpler, more generous pension which sets a foundation for them to plan their retirement.

“For the first time in a generation, people will know that it pays to save. Whatever they manage to put aside won’t be eroded by means-testing in their retirement.

“The current system is not only unfair, it’s a complex mess. Even pension experts struggle to calculate their own state pension from a jigsaw of payments and credits.

“The NAPF has fought long and hard for a better state pension, and today is a clear step forward. We look forward to sharing our thoughts with the Government on this vital piece of legislation.

“The end of ‘contracting out’ by defined benefit pension schemes is an inevitable part of simplification. But the Government must make an early promise that it will make it simpler for schemes to contract back in. It must not load extra costs and red tape on these pension schemes, which are under severe pressure.”

Today’s Green Paper closely echoes the NAPF’s proposals for a simpler, more generous ‘Foundation Pension’ made in March 2010.

A foundation pension will radically simplify the state pension system by combining the basic and state second pension into a single pension above the level of means-tested benefits. This will ensure that people can save for their retirement with the confidence that they will not have their savings eroded by means-tested benefits.

 

Notes:

1. Joanne Segars is available for interview.

2. The National Association of Pension Funds is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.

Contacts:

Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]

Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]