[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Friday, 13 May 2005, 14:26 GMT 15:26 UK
Workers 'must bear pension risk'
Commuters
The current pension system should not be relied on
Individuals should bear the risk of living longer, not the state or private companies, the head of the Pensions Commission has said.

Adair Turner also said that it was clear that the current UK pensions system would not solve the problem of inadequate saving by many people.

The commission has already estimated that more than 12 million people are not saving enough for their retirement.

Mr Turner said the commission's final report would be released in the autumn.

Options

The question is no longer what is the situation, but what should we do about it?
Adair Turner, Pensions Commission chairman

The interim report from the Pensions Commission - published last October - said a mixture of higher taxes, more saving and a higher average retirement age was needed to solve the UK's pension crisis.

Speaking to the National Association of Pension Funds (NAPF) conference in Manchester, Mr Turner said that what he called the current system of "muddling through" was not an option.

"The question is no longer what is the situation, but what should we do about it?" he said.

He argued that life expectancy is unpredictable, and that if it suddenly rises then companies or tax payers should not have to foot the bill.

Mr Turner also said that the Pensions Commission remained "unconvinced" that scrapping the current second state pension to create a simplified state system was the best option.

The NAPF has proposed scrapping the second state pension in favour of a universal pension which would rise in line with average earnings.

However, Mr Turner did acknowledge that the second state pension was "muddled and for many people impenetrable".

"In the long-term we should probably choose between either converting it into an understandable compulsory savings scheme or integrating it into a more generous and understandable basic state pension," he said.

Responsibility

On Thursday, David Blunkett, the new work and pensions secretary, said he had ruled out none of the options for pensions reform, including compulsory saving.

He added that he wanted to build a consensus with MPs, the public and industry over the necessary reforms.

But Mr Blunkett called for people to "take responsibility and key decisions for themselves".

He described his approach as "something for something" - not a "safety net".




RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific