State pension review needed, says NAPF Younger people require an incentive to save
27 June 2011
Making the state pension simpler could spur millions of younger people on to save more towards their retirement, according to a new survey from the National Association of Pension Funds (NAPF).
The survey highlighted that half (47%) of those aged between 18 and 34 - more than six million people - would save more for their old age if they knew how much state pension they would get.
Surprisingly, the study found that younger people felt much more strongly than older age groups about a better state pension.
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Current pensions system is unclear
Joanne Segars, Chief Executive of the NAPF, underlined that she felt that younger people needed more clarity and information in order to save: 'They’re keen to take more control of their retirement, but they need a clearer state pension foundation on which they can build their own nest egg.
'If they could see the state offer might not be enough, they’d be more inclined to get their own savings sorted, partly to avoid working past an increasing retirement age.
'The current system is a dog’s breakfast and makes it impossible for people to plan their future. Even pensions experts struggle to work out what they’ll get, so what hope does Joe Public have?'
Changes to state pension are essential
Paul Davies, analyst at Which? added: 'People are currently unclear about how much money they'll get in retirement via the state pension. The system of pension credits and a second state pension makes it hard to gauge what your final state pension will be.
'Having a simplified structure with a flat-rate pension guaranteeing an index-linked amount would represent a significant step forward. This will hopefully encourage younger people to consider their future at an earlier stage and therefore build a larger retirement pot.'
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Which? Money - Live pensions Q&A
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