State Pension Reform
Consultation on ‘A state pension for the 21st century’
The consultation ‘A state pension for the 21st century’ was launched on 4th April 2011 and ended on 24th June. It sought views on a number of options for reform. The aim is to provide a simple, fair and affordable solution. Difficulties with the present system include its complexity, inequalities (adversely affecting lower paid workers, women and the self-employed) and the means-testing of benefits which acts as a disincentive to people to save for their own retirement. Whatever decisions are made about future state benefits, it is clear that we can expect to be working for longer as normal retirement age is gradually increased. There will also be reform of the current two tier system of Basic state pension plus state second pension. The government does appear to have recognised that it has to encourage individuals to provide for their own retirement. The loss of means-tested benefits has discouraged many potential savers who may now wish to review their attitudes towards retirement saving including pension schemes. The prospect of later retirement ages may also encourage savers to invest to fund retirement before the state pension age.