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Last Updated: Tuesday, 4 April 2006, 07:25 GMT 08:25 UK
Turner to air pension conclusions
Lord Turner
It is unclear which of Lord Turner's proposals ministers will favour
Lord Turner's Pensions Commission is unveiling his final views on the future of the state pension system.

A key point is expected to be a defence of Lord Turner's idea for a National Pension Saving Scheme (NPSS).

After the publication of the commission's second report last November, this turned out to be one of the more controversial ideas.

The government will publish a White Paper later this spring on the future of the state pension system.

It is not clear yet which of Lord Turner's proposals will find favour with the government.

But he told BBC Radio Four's Today programme: "What is important is that people looking forward will know what the state will do for them, what the state will not do for them, and what private savings they have to make for themselves."

He continued: "We need a settlement for pensions which achieves a broad consensus and sticks."

Lord Turner said he had proposed a "package of reforms" which affects both state pensions and private pensions.

'Chancellor's objections'

The NPSS scheme would require employers and staff together to pay in 8% of salaries each year.

Last autumn it became obvious that Chancellor Gordon Brown did not like one suggestion that would mean phasing out means testing for pension credits.

And apparently he also dislikes Lord Turner's idea that the reorganised basic state pension should be revalued each year in line with earnings, rather than inflation.

But other government ministers have been much more supportive - at least in public.

In February the work and pensions secretary, John Hutton, said that an increase in the state pension age was "inevitable" by 2020.

On Tuesday, pensions expert Tom McPhail, from Hargreaves Lansdown, told BBC Radio Five Live: "I do think we'll see the retirement age going up, I do think we're going to see some form of soft compulsion, I think that is inevitable.

"But there's going to be an awful lot of tears and arguments over the means of it before we get there."

Higher state pension age

The idea that the state pension age will have to rise from the current level of 65 - maybe to 69 or even higher - was a central feature of Lord Turner's report.

The report's overall aim is that by 2050, people will not only be living longer but, to ease the burden of the state paying their pensions, they should also be working longer, retiring later and saving more.

The big carrot among the various sticks in the report is that, if all goes according to Lord Turner's grand plan, pensioners would also be receiving substantially higher state pensions, amounting to possibly 60% of their salaries.

The idea is that half of that should come from the revamped basic and second state pensions.


The other 15-30% is supposed to come from the new NPSS, to which all employers would be forced to contribute and to which all workers would be recruited - unless they were already in an occupational pension scheme.

Pensioners at National Pensions Day meeting in London
The pensions debate has generated strong feelings

This has been given a mixed response, at least by employers and various vested interests in the pensions industry.

The National Association of Pension Funds denounced it as Stalinist.

The Association of British Insurers argued that existing pension fund managers, often insurance firms, should be given the task of managing the investments held by the NPSS.

And employers organisation the CBI criticised the most fundamental aspect of the scheme, saying that the NPSS should not be compulsory and that employers should be able to opt out.

National Pensions Day

In March the government staged a National Pensions Debate, involving 1,000 members of the public at six meetings in cities around the country.

Just over half agreed that there should be a gradual rise in the state pension although a third disagreed.

The idea of an NPSS with automatic enrolment of employees gained much more support, with 87% agreeing that employers should contribute.

When asked which of Lord Turner's four options they liked most - getting poorer in old age relative to the rest of the population, seeing a greater proportion of taxes going towards state pensions, saving more, and retiring later - the most popular choice was for more taxes to support state pensions.

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