EOC joins calls for improved state pension provision

Independent research carried out for the EOC by the Pensions Policy Institute found that a second state pension should be created that only supports those least able to save, such as parents and carers who are out of the labour market, as well as the low paid.

EOC’s two-tier state pension would include a replacement for the basic state pension with a universal state pension from 2010, paid to everybody over state pension age.

The universal basic pension would be set at the current level of basic pensions (£85 a week for 2005-6) but then linked to earnings.

The EOC said the cost of its proposal would be 5.6% of GDP (£81bn), rising to 8.1% of GDP in 2050 (£255bn).

These figures are almost the same as the Pensions Commission’s proposal – which would cost 5.6% of GDP in 2010, rising to 8.2% in 2050 – and the CBI’s posposed citizen’s pension – expected to cost 5.8% of GDP in 2010, rising to 8.3% in 2050.

Jenny Watson, who chairs the EOC, said often people who take time out of the workforce to look after children or older relatives, or who work part-time in low paid jobs, find themselves unable to save for retirement.

“A targeted second state pension to support parents, carers and low paid workers will help to make this a thing of the past, and ensure they too can achieve an adequate income in retirement,” she said.

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“Combining better targeted state support with a clear responsibility to save, offers a fair and affordable pensions system.”