Government publishes pension reform principles

The government has made its “first step towards pensions reform” by publishing the key principles that will underpin changes.

Last year, Adair Turner’s Pensions Commission warned that the UK is in the midst of a pensions crisis and called for urgent action to ensure that people saved enough for their retirement.

Work and pensions secretary Alan Johnson today said there was no consensus for reform and he wanted to avoid “knee jerk” reactions to a long-term issue.

Publishing the principles for reform, Johnson said the full impact of the “ageing society” would not be felt for two decades and the burdens on future generations had to be recognised.

“Various organisations are putting forward very different proposals for pension reform,” he said. “We must engage seriously with all of these, but as yet there is no consensus on the detailed way forward.

“As a first step, I’m outlining principles for pension reform which should give us an agreed framework in which to evaluate all the options and define a way forward.”

The principles are:

  •  The pensions system must tackle poverty effectively
  •  The opportunity to build an adequate retirement income for all
  •  Public pensions provision must remain sustainable
  •  Fair outcomes for women and carers
  •  A better understood system
  •  To go forward, where possible, in consensus.

The TUC has welcomed the pensions announcement as “a clear signal the government recognises the depth of our pensions problems and the need for a radical response, particularly for women”.

TUC general secretary, Brendan Barber, said, “While no one can expect the government to produce a fully worked out response to the pensions problems in advance of the Turner Commission’s final report, it does provide some useful clues on government thinking.

“In particular the secretary of state clearly recognises the particular difficulties faced by women, who can easily miss out on both occupational and state pensions. It will be very hard for the government not to make radical changes for women after the publication of this paper. It also asks some good questions about the state second pension, which suggests that the government recognises its importance particularly for those on moderate pay.”

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