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High-earners could see S2P cash slashed

Aegon says the introduction of Lord Turner’s NPSS proposals could see benefits from the state second pension almost halve for mid to high-earners.

Its research reveals higher-earners could see S2P benefits cut by up to 50 a week.

Turner wants S2P to be downgraded, removing the earnings’ link and just paying a flat-rate benefit.

Aegon head of business regulation Steven Cameron says it is likely the Government would use National Insurance contributions to S2P to subsidise some areas of pensions.

As an alternative, Aegon suggests putting NI contributions into funded personal accounts which could also help to ease the unfunded state pension burden. Cameron says: “Turner’s proposals will be increasingly redistributive for higher earners who could see their S2P benefits cut by up to 50. There has been silence on S2P as everyone has focused on Timms’ challenge for an alternative to the NPSS. This is a debate that must be had.”

Tory Shadow Work and Pensions Secretary Phil Hammond has expressed support for Aegon’s stance, saying further debate is necessary on state pension reform.

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