Turner Commission: Retire later for bigger pension
Thursday, 17 November 2005 12:00
The government's Pension Commission is set to recommend that Britons should work longer for a larger state pension, a leak to the Financial Times indicates. For an assessment of the full report, click here.
According to the FT leak, a key recommendation of the report is that the official retirement age be increased to 67 for men and women, and in return the basic state pension will rise from £82.05 to around £109 a week.
These changes would be delayed, with the retirement age starting to increase in 2020 - the date already set for a harmonisation of the retirement ages of men and women.
Another key recommendation of the report, according to the FT, will be automatic enrolment for workers in a new national pension scheme.
Employees will pay around six per cent of their salary into this, matched by their employers, with workers given the option to opt out and a limited choice of funds to invest in. By setting this up, management charges will be reduced from around one to one-and-a-half per cent - which is currently charged by the stakeholder schemes - to around 0.2 per cent.
The new 'Britsaver' scheme is set to be modelled on New Zealand's Kiwisaver scheme, the FT reports.
The boost to the basic state pension - to approximately the levels suggested by the National Association of Pensions Funds (full story) and the Institute of Directors (full story) - will be supported by scrapping the state second pension, or turning it into a flat rate scheme closely aligned to the basic state pension.
Means tested benefits on pensions, which already guarantee a minimum retirement income of £109 a week, would also be scrapped.
Lord Adair Turner's Pension Commission is set to release its full report - along with its recommendations as to which options it prefers - on November 30th.
In his interim report, Lord Turner pointed out that as life expectancies increased, and the number of Britons of working age compared with those over 65 fell, pensioners would become poorer unless action is taken.
The last report suggested that either retirement ages would have to rise, taxes increase, or people would have to save more to prevent this.
According to today's leak, Lord Turner appears to have opted for a combination of all of these solutions.
Comments
Newsletter sign up