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Last Updated: Wednesday, 29 March 2006, 03:58 GMT 04:58 UK
Call for simpler state pensions
Lord Turner
Lord Turner's Pensions Commission issued its report in November
Most experts believe Lord Turner's Pensions Commission report should have gone further to reduce the means testing of benefits, a report has said.

Independent research group the Pensions Policy Institute spoke to nearly 80 experts at more than 40 organisations.

Its report proposes a single flat-rate state pension that could be paid to more people and reduce means testing.

The government's response to last November's Pension Commission report is due in a White Paper this spring.

Lord Turner wants to improve the existing state pension scheme by restoring the link to earnings, so it becomes more generous and fewer people require means-tested benefits.

But the Pensions Policy Institute (PPI) said the current complex scheme could be scrapped and replaced by a simpler one with entitlement based on residency rather than National Insurance contributions.

For most pensions experts, a better state pension means a structure that people can understand, providing full benefits to a wider range of individuals and a high enough level of benefits so that means-testing for basic income is reduced
PPI director Alison O'Connell

Many elderly people failed to claim the means-tested Pension Credit to which they were entitled and the system created uncertainty among people about how much they would receive from the state, the experts said.

The best way to ensure stability in the system was to have the simplest most transparent state pension possible, they said.

PPI director Alison O'Connell said: "There is no doubt that every pension expert wants to see change in state pensions.

"For most pensions experts, a better state pension means a structure that people can understand, providing full benefits to a wider range of individuals and a high enough level of benefits so that means-testing for basic income is reduced."

Persuading people

The experts agreed with Lord Turner that people should be encouraged to save more to supplement the state pension - possibly through the introduction of a national voluntary earnings-related pension scheme, into which they would be automatically enrolled.

But they also thought it unlikely the government would achieve its long-term aim of persuading people to have 60% of their retirement income coming from private provision, with just 40% from the state.

And the report says more will have to be spent on state pensions, arguing there will be 50% more pensioners by 2040.

It also calls for reform of the tax system to stop higher earners receiving the most tax relief on their pensions.




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