The National Association of Pension Funds recommends a Citizen's Pension of £100 per week.

A new Citizen’s Pension, worth £100 a week and rising in line with earnings, is at the centre of radical new proposals for pensions reform, published today by the National Association of Pension Funds (NAPF).

In its wide-ranging policy paper “Pensions – Plain and Simple” the NAPF sets out a number of key reforms which would boost incomes for the poorest pensioners, strip away complexity, encourage consumers to save more, remove barriers to workplace pension provision, and improve consumer understanding and protection.

The proposals include replacing the present tangle of State provision with a single, universal, flat rate payment worth about 22% of average earnings and rising in line with earnings. Beyond that, individuals will be encouraged to make extra provision, either through the workplace or with personal or Stakeholder pension providers.

Among the key recommendations in “Pensions - Plain and Simple” are:

• replace the tangle of existing State pensions with a single, universal, flat rate Citizen’s Pension worth £100 a week at present and rising in line with earnings;
• abolish restrictions on retirement age, but raise the age at which the new Citizen’s Pension becomes available from 65 to 70 between 2020 and 2030 – allowing the new, more generous pension to be provided at no additional cost to the public purse;
• offer more generous tax treatment for longer-term savings, rewarding pension savers more than savers in ISAs or other short-term savings vehicles;
• abolish rules limiting individuals’ ability to join more than one pension scheme;
• offer better pension protection for occupational pension scheme members nearing retirement age whose employer goes bust;
• remove rules preventing employees continuing to work for the same employer while drawing down part of their pension; and
• abolish rules restricting the amount individuals can pay in, or receive in benefits from, their pension scheme.

Launching the paper, NAPF Chairman, Peter Thompson, said:

“Today’s pension system is weighed down by red tape, jargon and complexity. Because of this, too many of today’s workers are put off thinking about pensions, storing up potentially massive problems for the future.

“The proposals we have published today tackle this problem head-on. They would replace the present over-complicated mix of State pension provision with a single, flat rate Citizen’s Pension, payable to everyone, set at a high enough rate to help more pensioners out of poverty, and linked to rises in earnings rather than prices. This would be achieved at no extra cost to the public purse.

“Today’s workers would then know exactly where they stand. They will also know that if they wish to enjoy a more comfortable income in retirement, they must make additional arrangements, either through the workplace or with a personal pension provider.

“With this one straightforward and affordable change, the whole picture becomes simpler. Not only are the various State pensions rolled into one, but the need for complex decisions over contracting in or out of the State scheme is removed, along with a forest of red tape.

“We have also set out a series of practical and affordable steps towards encouraging employers to offer – or to continue to offer - workplace pensions, and encouraging employees to make the most of them.

“And by boosting the security of those in workplace pensions, particularly those approaching retirement, these proposals will go a long way towards restoring consumers’ faith in the pension system.

“These proposals are a well-thought out, costed and effective answer to many of the problems which threaten to push today’s pension system into crisis. I hope the Government will use them in drawing up its own reform proposals to be published later this year.”

A copy of the full document, “Pensions – Plain and Simple”, can be downloaded in PDF format from the NAPF website.