The long awaited, and much leaked, report by Lord Turner into the state of the UK's pensions system has proposed raising the state retirement age to 68 years.
The Pension Commission’s other central recommendations include the launch of a new national pensions savings scheme, or NPSS. As was widely reported before the report’s publication, employees would be automatically enrolled into this scheme, although they would retain the option to leave if it if they so desired.
The scheme envisages 5% contributions from employees and, potentially controversially, a 3% mandatory contribution from employees, topped up by a 1% injection from government.
Another controversial suggestion is that the link between the state pension and earnings be restored. Chancellor Gordon Brown reportedly questioned whether this measure is affordable even before the Turner Report was published, leading to a political row over whether the government was seeking to sabotage the commission’s findings.
Lord Turner, a former leader of the Confederation of British Industry who has spent three years investigating the pensions issue, said he hopes the report will stimulate a meaningful debate. There is widespread consensus that currently, public trust in the pensions system has been undermined both by poor stock market performance and a series of mis-selling scandals, and that a significant chunk of the UK’s adult working populace is not saving enough for their old age.
In contrast to his finance minister, prime minister Tony Blair has given the report a warm reception, indicating that he feels its basic structure offers a useful blueprint for future reforms.