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Pensions White Paper is published

The pension reform White Paper has called for the basic state pension to be relinked to earnings, the abolition of the contracting out rebate for DC schemes and a choice of NPSS models.

The Government will continue to consult over the best way forward for NPSS in terms of who will run the scheme, giving the insurance industry more time to argue its case.

The White Paper pledges to reduce the spread of means testing to a 33 per cent level with alterations to the savings credit from 2008 to give what the Government claims will be a clear incentive to save.

It says NPSS personal accounts will give 10m people the opportunity to save with employers contributing 3 per cent in the 5,000 to 33,000 band.

Autoenrolled employees will contribute 4 per cent with another 1 per cent coming from the Government.

To allow small businesses time to adjust the scheme will be phased in over a three year period.

The basic state pension legislation will appear in an Autumn Bill. State pension age will rise to 66 for both men and women from 2024 over a two year period with further rises to 67 in 2034 and 68 in 2044.

The Financial Assistance Scheme will also be increased from 400m to 2.5bn in response to Ann Abrahams recent damning Parliamentary Ombudsman report.

The Government will also introduce a rolling deregulatory review of pensions regulation in light of the Pensions Act 2004.

Prime Minister Tony Blair says: It is a bold blueprint. It involves difficult decisions for everyone- Government, business, the pensions industry and individuals. But thanks to the work of the Pensions Commission, we know already that there is wide support for the principles behind these reforms.

Cicero Consulting director Iain Anderson says: The fact that Tony Blair has been so vocal this morning talking about the biggest reform of welfare in a generation shows that this is all about his legacy.

The consultation over NPSS gives the industry another chance to put forward its arguments before the final Government decision.


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