Pensions minister Steve Webb has slated the state pension system as “hopelessly inadequate” and hailed the National Association of Pension Funds’ idea of a foundation pension.
Speaking at a fringe event at the Liberal Democrat conference in Liverpool last week, Webb said it is essential that the Government simplifies the state pension and ensures the system is more efficient.
He said: “The key is getting what the state does right and in my view what the state does at the moment is hopelessly inadequate.
“What has got to be right in terms of direction of travel is there has got to be a single, ideally simple, state pension, where people know what they are going to get.”
Webb said the NAPF’s idea of a foundation pension is the right direction. The NAPF wants the Government to combine the basic state pension and the second state pension to create a simple state pension paying £8,000 a year. It says this would give pensioners £25 a week in additional income and lift two million people out of means-tested benefits.
NAPF chief executive Joanne Segars said: “Combining together the basic state pension, the second state pension and all the other stuff into the single simple state pension, which we have called the foundation pension, would give people a foundation on which to build other savings for retirement.
“We also want to see better lighter-touch regulation for employers who do run schemes. It is astonishing that over 800 pieces of legislation on pensions alone have been passed since 1995 – that is about one a week. And we need to make sure the tax system incentivises people to save into a pension.”