Plans to create a new 'simpler' state pension system that would give Brits the opportunity to retire on two-thirds of their average earnings have been unveiled by the National Association of Pension Funds (NAPF).
Under the proposals, a new state pension, known as the Foundation Pension, would be worth £8,000, which according to the NAPF would lift two million pensioners out of means-tested benefits and give them a pension worth one third of their average earnings, with the other two thirds made up of savings and private pension fund investments.
The new Foundation Pension would be a combination of the current basic state pension and the second state pension, providing pensioners with an additional £25 a week.
In addition, the NAPF wants to revitalise workplace pensions by increasing the statutory minimum contribution from employers from eight per cent to 11 per cent, which would ensure Brits receive a workplace pension worth around one third of their former earnings.
Commenting, Joanne Segars, chief executive of the NAPF, claims the proposals will create a pension system "which is fit for the 21st century".
"They increase the value of the state pension for everyone, radically reduce concerns over means-testing, and increase the value and quality of workplace pensions.
"The Government's 2012 reforms (auto-enrolment) are a major step forward and our proposals complete the task," she said.
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