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State pension system to be reformed
Minister for Pensions Steve Webb has said the new Pensions Bill will 'radically simplify the state pension system'
The state pension system will be reformed and simplified to make sure it keeps pace with people living for longer.
Under the Pensions Bill, the Government will replace the existing "complex" system with a new single tier pension and bring forward an increase in the state pension age to 67 between 2026 and 2028.
The reforms follow concerns that people are not being encouraged to save enough for their old age as they are being put off by the current system, which is too complex. But they also send a strong signal that the age of retirement will continually creep up as the pension system is routinely reviewed to make sure it keeps pace with increased lifespans.
The Government paper said it is "committing to ensuring that the state pension age is increased in future to take into account increases in longevity".
The measures will run alongside a landmark drive to tackle the pensions savings crisis, which will see up to 10 million people automatically enrolled into workplace schemes from this autumn, starting with larger companies.
Plans to introduce the simple, single-tier state pension of about £140 were outlined in the recent Budget as part of the general drive to encourage people to start putting more aside for their retirement.
The Government announced last November that the state pension age will increase to 67 between 2026 and 2028. This will bring the rise forward, as under the current law it is due to increase to this age around eight years later, between 2034 and 2036.
John Lawson, head of pension policy at Standard Life, has said of the move: "If after 2026 the state pension age increases in line with our changing life expectancy, we could expect that someone who is currently 37 won't be able to start drawing their state pension until they are 70 and someone who is 21 won't receive it until they are 75. This means that children born in 2012 are unlikely to get their state pension until 80, if life expectancy at retirement rises in line with the last 30 years."
Joanne Segars, chief executive of the National Association of Pension Funds, said: "This is another big step towards a simpler, more generous state pension that no longer penalises people for saving. We are all living longer, so it is inevitable that retirement ages move upwards to reflect that. The trade-off for working longer must be a better state pension come retirement."
Minister for Pensions Steve Webb said: "Our plans will radically simplify the state pension system and set it above the level of the means test, providing a fair and sustainable foundation for pension saving for people of working age."
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Once again pensioners of today will be swept under the carpet. Two level pensions and each level will have 2 levels, Frozen pensioners will be forgotten about again and will continue to struggle on the bottom level. Those pensions stuck on the same pension for up to 30 years will one by one die off. Much to the relief of Cameron, Clegg, IDS, Webb and Osborne. Inhuman, illogical and immoral are the words that describe the government ministers that continue to ignore half of the 1.2 million pensioners that live in some countries around the world. The other half? They get their full pension! SORRY BUT THE EQUALITY AND FAIRNESS THIS GOVERNMENT KEEP SPOUTING IS BULL- - - -!
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