A non-means tested pension for all would reduce pensioner poverty, provide a far simpler state pension system on which to build additional savings, and would be fairer to millions of women and carers, according to a report.
In its final submission to the Pensions Commission, the National Association of Pension Funds (NAPF) said a ‘citizen’s pension’ would provide a more secure guarantee against poverty in later life, and lift up to 10 million future pensioners off means tested benefits.
The association said the principle of a simple, adequate, first-tier state pension, available to all, has become the basis for a growing consensus among opinion-formers in the pensions, political and academic arenas.
Research carried out for the NAPF by Mori indicates public support in the UK for key aspects of the citizen’s pension. Four out of five respondents approve of the idea of equal pension payments for men and women, even where women have taken work breaks, or are working part-time on low salaries, the research shows.
NAPF chief executive, Christine Farnish, said: “People want a simpler, fairer system, which does not penalise women who have taken work breaks, and which does not subject millions of pensioners to means testing.
“The citizen’s pension meets these criteria, and makes the whole pensions landscape much clearer.”
If the scheme is introduced in 2010, it would cost no more than the current state pension system, provided the money currently spent on the Basic State Pension, State Second Pension and Pension Credit was used, the NAPF report said.
The future cost of raising the citizen’s pension in line with earnings could be addressed in different ways, it said.
For example, state pension age could be increased to 67 by 2030 with either an increase in National Insurance contributions of up to 1.5%, or a further increase in state pension age to 69 by 2040.