Radical changes to the basic state pension were announced in the Queen’s Speech last week along with a delivery authority to advise on personal accounts.
The speech outlined plans for a pension reform bill which will restore the link between the basic state pension and earnings, raise the state pension age to 68 by 2046, reduce the number of qualifying years it takes to receive the state pension to 30 and abolish contracting out for defined-contribution schemes.
The delivery authority will be charged with designing and implementing personal accounts, more details of which will be revealed in next month’s White Paper.
Aegon head of business regulation Steven Cameron welcomes the bill and the impact it will have on women and carers but warns that more reforms are needed.
He says: “Unless the bill introduces new measures, we do not believe the reforms go far enough as they will leave an estimated one-third of people subject to means-testing in retirement.”
Association of British Insurers director of life and pensions Chris Kenny says: “Much more work is needed to get the fine detail right and, crucially, the Government must ensure that the existing pension market, which serves millions of customers well, is able to prosper.
“If the Government is to achieve the aim of getting more people saving more for retirement, the bill must contain firm measures to reduce means-testing in the pension system.”
Investment Management Association chief executive Richard Saunders says: “Our view remains that the national pension savings scheme holds out the prospect of significantly boosting savings but its success will depend on getting the details right.
“We look forward to continuing to work with the department and the delivery authority to help achieve this.”
The speech also outlined carried-over legislation to improve the welfare system, reforms of the planning system and plans to regulate claim management companies and estate agents.