The Pensions Commission published its second report this week
containing proposals on how to address Britain's pensions crisis. The
reasons behind the crisis include a rising life expectancy and a
decline in voluntary pension provision by both employers and employees.
Lord Turner who chaired the Pensions Commission recommends the following in his report:
- An increase in the state pension age in line with life
expectancy. Based on current trends, the state pension age will be 68
- An increase in the state expenditure on pensions
- A universal flat-rate pension paid to those who are eligible and
eligibility is based on UK residency as opposed to national insurance
- The pension would increase in line with earnings growth
- The introduction of a National Pensions Savings Scheme (NPSS).
Employers would offer the NPSS to all employees and employees would be
automatically accepted unless they choose to opt out. Employers and
workers would have to make a minimum contribution of 3% and 4%
respectively and the Government would contribute 1%
It remains to be seen whether the Government considers Lord Turner's recommendations to be the way forward for pension reform.