Proposals announced today for a national pension saving scheme are a lifeline which could save UK pension provision.
The government-appointed Pensions Commission, headed by Lord Turner, today published its long-awaited plans for an overhaul of the UK pensions system. Among them is a controversial recommendation to raise the retirement age to 68 by 2050.
Another proposal is a national pension saving scheme (NPSS) which would sit alongside the current state pension. Which? has been calling for such a scheme for years, and we welcome the plan.
All employees without decent existing provision would be automatically enrolled; their contributions would be 5 per cent and employer contributions would be 3 per cent. Employees would have the right to opt-out.
Contributions would be collected through the national insurance system and paid into a personal retirement account – with low charges – which would mean that if a person died the money would go to their estate rather than the state.
Accessible to all
Which? called for such a scheme in its submission to the commission. We think the scheme will make pensions accessible to all.
Which? Principal Policy Adviser Mick McAteer said: ‘It is really encouraging to see that today’s recommendations mirror our proposals so closely.
‘The national pension scheme is the lifeline that could save pension provision in the UK from drowning. The scheme is a real breakthrough because it will keep the cost of accessing a pension low, giving people the confidence to provide for the future.
‘The public need to know, however, that the government is serious about helping them provide for their retirement. There has been so much rhetoric about pensions that work should start right away on the crucial job of communicating what this development means for the public.’
Other proposals include:
- a call for a more generous state pension but with a gradual rise in the state pension retirement age to 68 by 2050
- measures to improve the position of people who leave work for a few years to, for example, look after children and are worse off under the existing system
- measures to facilitate working later into life, and flexible retirement for those who want it
The commission has spent three years canvassing opinion on how to tackle the crisis which has been sparked by people living longer, a lack of confidence in saving for retirement and the rising cost of pensions to the state.