A working group of pension bodies is meeting to create a UK citizen's pension which would remove the need for means-testing.
The high-level working group, chaired by former National Association of Pen-sion Funds chairman Tom Ross, will work on practical solutions to implement a citizen's test based on a simple residency test.
The new pension would replace the current basic state pension, second state pension and means-tested pension credit, a system widely seen as overly complex and a barrier to additional pension saving.
The project brings tog-ether groups, including the NAPF, the National Consum-ers' Council, the National Pen-sioners' Convention, The Act- uarial Profession, the London School of Economics and the Pensions Policy Institute.
Providers Legal & General and Scottish Equitable as well as Goldman Sachs and Price-waterhouseCoopers are also part of the working group.
The project will directly address issues such as how best to phase out contracting out and merge the two state pensions, how to devise an effective residency test and the optimal level at which to set a citizen's pension.
The group is also looking at the extent to which any means-tested benefits would still be needed and the development of a practical plan and timetable for change.
Ross says: “With almost unanimous support for a radical reform of the UK state pension system, the time is right to work on the details of how to implement the citizen's pension.”
NAPF chief executive Christine Farnish says: “Over the years, the UK's pension system has become ever more complex and confusing. We are now taking steps towards fleshing out a practical and affordable transition path from the current archaic system to a citizen's pension regime.”
