More generous state pension, longer working life: commission recommends

More generous state pension, longer working life: commission recommends

	Published : Thu, 17 Nov 2005 15:20 By : David Simms Print this Story

LONDON: Britain’s workers could work longer and get a more generous state pension, according to a recommendation by the Lord Adair Turner-led Pensions Commission.

The commission appointed by the government just completed a study of pensions savings which included some overseas state-backed pension models. The recommendations were revealed in an article in Financial Times ahead of publication of the commission’s report at month-end.

The commission will call for a more generous pension. It will also recommend raising the claimant age from 65 to 67 years allowing workers to work two more years and earn the more generous pension.

The FT report said the commission will ask for state pensions to be raised from the basic £80-a-week basic to £109-a-week means-tested minimum income guarantee. This growth in income will make healthy additions to public spending and the state taxation and the additional two years of work would pay for the increased state pension.

It will also propose a new national savings plan where individuals are automatically enrolled but have an option, for a limited period, of opting out. This savings plan is based on New Zealand’s ‘Kiwisaver’ and the US’ Thrift Savings Plan.

The changes recommended should be implemented in stages after 2020, the year when the claimant age for women will be 65. Currently women can claim pensions at age 60.

The commission will suggest that pensions increase with earnings, not with prices alone. It should also take into account increasing longevity for a fairer state pension. If accepted, the pensions reform could be in place after 2020, which means anyone currently under 50 would benefit from those recommendations.

When contacted, a commission spokesperson denied they had spoken to FT and called the article mere speculation. He said the commission would not be commenting ahead of its report slated for November 30.