Government launches pensions revolution
The government today launched what has been hailed as a revolution in UK pensions.
With an aging population, a 'pension crisis' has been looming for some time - and Labour ministers responded today by proposing legislation to deal with this.
Drawing heavily on the findings of Adair Turner's pension commission, the pensions white paper proposes raising the retirement age to 68 by 2050, and raising state pensions in line with average earnings.
Additionally, a new National Pensions Savings Scheme (NPSS) will be introduced. Employees would be automatically enrolled in such a scheme or a similarly highly-rated company pension plan - although they would be given the option to opt out - with money collected automatically from salaries.
Under the scheme, four per cent of the employee's salary would go towards a pension plan, with their employer and the government then doubling this investment by contributing the equivalent of another four per cent (three per cent from the employer and one per cent from the government).
This money would go to a central pension fund, which could offer exceptionally low management costs due to the amount of money being invested in it by employees across the country.
Other changes include raising the state pension age to 68, but doing this gradually over the decades to come, a reduction in means testing and replacing the second state pension with a higher basic state pension.
There are also measures to address the current pensions inequality that sees women receive less than men.
Pension minister John Hutton has said contribution systems will change to make it easier for women to claim the full entitlement.
Click here for a full breakdown of the Turner Report
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