Iain Duncan Smith and Steve Webb today outlined the bold steps they plan to take to fundamentally reform and repair Britain’s outdated and inadequate pension system.
Following the confirmation that the State Pension will be linked once again to earnings, Iain Duncan Smith used his speech to set out how the Coalition Government planned to reinvigorate retirement by helping millions of Britons to get back into a savings habit that has declined over the last decade.
Secretary of State for Work and Pensions, Iain Duncan Smith said:
Britain used to have a pensions system to be proud of, but due to years of neglect and inaction we are left with fewer people saving into a pension every year and the value of the State Pension has been eroded, leaving millions in poverty. We must live up to our responsibility to reinvigorate the pension landscape.
People are living longer and healthier lives than ever, and the last thing we want is to lose their talent and enthusiasm from the workplace due to an arbitrary age limit.
We also need to recognise that to meet the challenge of providing an affordable, stable pensions system in a society with ever increasing life expectancy, people will need to work longer.
And we will reward their longer working life by making sure that when they do retire, their pension is worth getting. We are taking radical action to restore the earnings link with the triple guarantee, ensuring our pensioners get the best possible deal.
Everyone needs to take responsibility for achieving the income in retirement they aspire to. We will support them in doing so by giving people the chance to save into a workplace pension and the freedom to work beyond retirement age if they want to.
Speaking alongside his Departmental colleague, Pensions Minister, Steve Webb said:
I’ve worked all my life to get a fairer deal for pensioners. Up to ten million people are not saving enough and we cannot allow this situation to continue.
Our plans to reinvigorate pension saving will be underpinned by automatic enrolment into workplace pensions from 2012. But we need to make sure we get the details right, which is why we’re announcing a thorough and speedy review, to make sure that it pays to save.
This radical agenda will be driven by:
- Restoring the link between the State Pension and earnings from 2011
- A call for evidence from the public and interested parties on raising the state pension age to 66
- Consulting on how we will quickly phase out the Default Retirement Age
- An independent review of how to make auto-enrolment work
A team of three independent experts will spend three months looking at how to make automatic enrolment work before reporting back to Government in the autumn.
Team leader, Paul Johnson said:
This is an important review for the Government and I am delighted to have been asked to lead it. We are fortunate that we will be able to build on the phenomenal work of the Pensions Commission, and all the work that has happened since then. I look forward to working with interested parties during the course of the review.
Alongside the announcement the Department published its call for evidence about the right point at which the state pension age should rise to 66 for both men and women.
Notes to Editors:
Paul Johnson is a senior associate at Frontier Economics and a Research Fellow at the Institute for Fiscal Studies. He has worked in the economics of public policy for 20 years including stints as a director at HM Treasury, Chief Economist at the Department for Education and Skills and Deputy Director at the IFS. Paul has been deputy head of the Government Economic Service and a council member of the ESRC. He has also researched and published widely on pensions and is a member of the council of the Pensions Policy Institute.
David Yeandle OBE
David Yeandle is the Head of Employment Policy of EEF, the manufacturers’ organisation, and his main responsibilities are representing EEF’s policies on employment and pensions to the Government and European Union. Before joining EEF in 1995, David worked for the Eastern Electricity Board and Pirelli Cables where he held a number of personnel roles and was Personnel Director from 1989. David is on the Council of the Pension Policy Institute (PPI) and was a member of the independent Pension Provision Group which advised the previous Government.
Adrian Boulding is an actuary with 30 years experience in the field of retirement provision, including working on all types of pension schemes. Currently he is Pensions Strategy Director at Legal & General. Adrian currently sits on the Pensions Committee at the Association of British Insurers, the Retirement Council at the Tax Incentivised Savings Association and the External Affairs Committee at the Pensions Management Institute.
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