The National Association of Pension Funds (NAPF) commented on the summary of the responses published today by the Department for Work and Pensions (DWP) on the Green Paper on the State Pension Reform.
Joanne Segars, NAPF Chief Executive, said:
“It is encouraging to see such overwhelming support for State Pension reform, with the Single-Tier option being singled out as the preferred choice.
“A simpler and more generous state pension of £140 a week would trigger a series of positive effects, benefitting millions of people.
“It would take millions off means-tested benefits, and would also help ensure that people have a strong foundation on which they can build their retirement savings. People would be encouraged to save more for their old age. Yet it would cost taxpayers no more than the current system.
“A single-tier pension is a necessary component to make the upcoming pensions auto-enrolment reforms work.
“However, a single-tier state pension would mean the end of contracting out for Defined Benefit pensions. This would have significant implications for employers, schemes and members, and needs to be managed carefully.
“Today’s clear backing of a Single Tier State Pension confirms that people are ready for a revamp of the State Pension. The Government has the clear political support needed to carry out such a reform, and we hope that it presses ahead with it swiftly.”
Analysis recently carried out by the Pensions Policy Institute (PPI) for the NAPF has shown that under the existing state pension system a third (35%)of all pensioners - or 4.4m people – would be eligible for pensions credit, a means-tested benefit, by 2055. But under a single tier state pension this would plummet to just 5% - or 0.8m people.
And according to a Populus survey for the NAPF, 60% of people who haven’t retired would save more for their retirement if they knew that they would receive a State Pension of £140 a week in today’s money. Thirty-five per cent would put more money into other forms of savings for retirement, while 25% would pay more into their pensions that come with their job.
Notes to Editors:
1. Joanne Segars is available for interview.
2. The summary of responses to the State Pension Green Paper is available at http://www.dwp.gov.uk/consultations/2011/state-pension-21st-century.shtml
3. The Pensions Policy Institute’s (PPI) research “An assessment of the Government’s options for State Pension reform” was commissioned by the NAPF to evaluate the potential impact of the state pension reforms set out in the Government’s Green Paper: A State Pension for the 21st Century.
4. Populus interviewed 1,526 adults online who have not retired in Britain between 3rd and 5th June 2011.
5. The NAPF 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.
Paul Platt, Head of Media, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]