The National Association of Pension Funds (NAPF) commented on announcements about the UK pension system made this morning by Iain Duncan Smith and Steve Webb.
On the state retirement age, Joanne Segars, NAPF Chief Executive, said:
“People are living longer and that means retirement ages will have to rise.
“But we cannot have workers retiring later and later on an inadequate state pension. The UK has one of the lowest in the developed world, and it is also too complicated. The trade-off for working later should be a better state pension.
"We also need to ensure that the right jobs are available to people in later life, together with increased levels of employer flexibility."
The NAPF proposes scrapping the existing state pension system and creating a Foundation Pension for all that would be worth £8,000 a year. This would take 2m pensioners out of means testing, and give pensioners £25 more a week. The Foundation Pension would partly be paid for by increasing the state pension age of 70 by 2046.
On the review of 2012 pensions reforms, Ms Segars said:
“The Government is right to focus on ensuring that auto-enrolment works well. It must be simple and cost-effective for employers to auto-enrol their staff into existing, good quality pensions. If that does not happen, there’s a greater risk hat employers will ‘level down’.
“However, this is a wide-ranging review that challenges some of the long-established elements of the 2012 package. The Review must not forget that the reforms are designed to help 10 million people who are not prepared for retirement, or who have missed out on pensions saving. That will be best achieved through providing access to high quality, well run, low cost schemes, including NEST.
“Auto-enrolment and NEST alone will not reinvigorate private pensions. The Government must work with the NAPF and others to support trustees and employers in strengthening today’s occupational pensions.”
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