PPI: state pension requires reform

30 March 2006
The state pension should be more generous, with a reduced need for means testing, according to a new report from the Pensions Policy Institute (PPI).

The research group spoke to around 80 experts and found a broad consensus that a single flat-rate state pension with a link to earnings was preferable.

The experts expressed concern that many elderly people had not claimed the means -tested pension credit they were entitled to, suggesting more clarity was the best way forwards.

They also thought that entitlement should be based on residency instead of National Insurance (NI) contributions.

However, while they maintaining it should have gone further, most experts agreed with the pension commission's report that more people should be encouraged to save for retirement, possibly through a national savings scheme in which people would be automatically enrolled.

Alison O'Connell, PPI director, said: "For most pensions experts, a better state pension means a structure that people can understand, providing full benefits to a wider range of individuals and a high enough level of benefits so that means-testing for basic income is reduced."

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