So what do the new proposals mean for you?


What does Lord Turner want to do with pensions?

Lord Turner is standing by all the recommendations his Pension Commission made last November. It called for a gradual increase in the state pension age - to 69 by 2050 - and the launch of a new private pension scheme, the National Pensions Savings Scheme (NPSS). All workers would be enrolled unless they have specifically opted out.

Does this mean I'll have to work for longer?

Not necessarily. This is simply the age at which you can begin claiming the state pension. If you have other resources - private pension savings, say - you may be sufficiently well-off to retire at a younger age.

Will state pensions become more generous?

Lord Turner says the basic state pension should be paid to all UK residents, irrespective of the national insurance contributions they have paid. He also suggests restoring the link between increases in the amount paid and average earnings. Currently pensions go up in line with prices, which tend to increase more slowly. But even if the reforms are adopted, the basic state pension would be worth just 17 per cent of the average person's pre-retirement salary.

Surely I'm not expected to live on that?

Those who have no other income or savings won't have to. The pension credit, the top-up benefit currently paid to poorer pensioners, will still be available. However, Lord Turner's proposals would reduce the amount of means-testing in the pension system.

What about my work pension scheme?

Employers with more generous pension schemes won't have to join the NPSS. Members of existing final salary and money purchase pension schemes may therefore be unaffected by these reforms, though some employers may cut back on benefits to the minimum required. Employees who don't currently have access to a decent pension scheme will be automatically enrolled into the NPSS, unless they opt out.

What if I'm self-employed?

Self-employed workers will be able to join the NPSS under Lord Turner's proposals, as will people not in work.

What's this going to cost?

It depends who you believe. The Pension Commission's report said public spending on pensions would need to go up from 6.2 per cent of GDP today to between 7.5 to 8 per cent in 2050. But the Chancellor thinks the costs could be higher. Gordon Brown warned yesterday that taxes might have to rise to pay for the reforms.

When will all this happen?

Lord Turner said in November that the NPSS could be set up by 2010 and that many state pension reforms could also be implemented by then (though the increase in the state retirement age won't happen before 2020). However, we don't yet know when the Government will publish a White Paper on pensions reform and with the Cabinet at odds over the proposals, delays look inevitable.

So the ball is back in my court? What should I do?

Even if Lord Turner's reforms are implemented, you won't be able to rely on the NPSS. The commission calculates a 35-year-old joining the scheme on a salary of £23,000 could expect a pension from the NPSS of just £3,000 a year in today's money. The only way to generate a decent pension is to save as much as you can afford while you're still working.

Pensions by numbers

* £57bn Gap between what people are saving and should be saving to maintain their standard of living in retirement

* 66 Percentage of men between 25 and 34 who expect to retire before 65

* 76 Percentage of women expecting to retire before 60

* £420,000 Amount a non-smoking 65-year-old male would need to buy an inflation-proof income of £20,000 a year for life

* £30,000 Average size of people's pension pots at retirement age

* 20.4 Average number of years a man will live beyond the state retirement age today

* 25.1 Average number of years a woman will live beyond the state retirement age today

* 42 Percentage of workforce contributing to a private pension today

* 6.1 Percentage of GDP spent on pensions in Britain

* 22 Percentage of earnings you need to save every month, if you don't save for a pension before 40

* 12 Percentage of earnings you will need to put away if you begin at 25

* 24 Percentage of earnings that adults under 30 spend on restaurants, hotels, recreation, alcohol and tobacco

The key points

* Lord Turner proposes raising the state pension age between 2020 and 2050, from 65 to 69. The retirement age for women is to rise from 60 to 65 between 2010 and 2020.

* The Pension Commission argues that the Basic State Pension should become more generous. It would be paid to all UK residents, irrespective of their National Insurance contributions.

* Means-testing should be steadily reduced, the Commission says, though top-up benefits such as the Pension Credit would be retained to protect those on low incomes.

* The Second State Pension should be retained, says Lord Turner, but should eventually be paid at a flat rate. Those who qualify for the full Basic State Pension and the maximum Second State Pension would get a pension worth about 30 per cent of average pre-retirement earnings.

* Lord Turner calls for a new private pension scheme, the National Pensions Savings Scheme, administered at low cost to produce as much income as possible in for members.

* To fund his proposals, Lord Turner says Government spending on pensions should rise from 6.2 per cent of GDP today to between 7.5 and 8 per cent of GDP by 2050.

Independent Partners: 10 top tips for retirement. Get your free guide here

PROMOTED VIDEO
Arts and Entertainment
American singer, acclaimed actor of stage and screen, political activist and civil rights campaigner Paul Robeson (1898 - 1976), rehearses in relaxed mood at the piano.
filmSinger, actor, activist, athlete: Paul Robeson was a cultural giant. But prejudice and intolerance drove him to a miserable death. Now his story is to be told in film...
News
i100
Arts and Entertainment
Babysitter Katie and Paul have terse words in the park
tvReview: The strength of the writing keeps viewers glued to their seats even when they are confronted with the hard-hitting scenes
Life and Style
Make-up artists prepare contestants for last year’s Miss World, held in Budapest
fashion
Sport
England’s opening goalscorer Alex Oxlade-Chamberlain battles with Scotland’s Charlie Mulgrew
FootballEngland must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Life and Style
life
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

    Ampersand Consulting LLP: Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Carlton Senior Appointments: Director, Private Bank - San Francisco, CA

    $175 - $200 per annum, Benefits: full benefits: Carlton Senior Appointments: P...

    Carlton Senior Appointments: San Diego, CA – Tier 1 House - Senior MD FA

    Not specified: Carlton Senior Appointments: Senior MD Financial Advisor - San ...

    Day In a Page

    US immigration: President Obama ready to press ahead with long-promised plan to overhaul 'broken system' - but will it get past a Republican-controlled Congress?

    Immigration: Obama's final frontier

    The President is ready to press ahead with the long-promised plan to overhaul America's 'broken system' - but will it get past a Republican-controlled Congress?
    Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?

    Scoot commute

    Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?
    Paul Robeson: The story of how an American icon was driven to death to be told in film

    The Paul Robeson story

    How an American icon was driven to death to be told in film
    10 best satellite navigation systems

    Never get lost again: 10 best satellite navigation systems

    Keep your vehicle going in the right direction with a clever device
    Paul Scholes column: England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil

    Paul Scholes column

    England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
    Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

    Terror unites Jerusalem after synagogue attack

    Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
    Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

    'How do you carry on? You have to...'

    The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
    Isis extends its deadly reach with suicide bombing in Kurdish capital

    Isis extends its deadly reach with suicide bombing in Kurdish capital

    Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
    Underwater photography competition winners 2014 - in pictures

    'Mysterious and inviting' shot of diver wins photography competition

    Stunning image of cenote in Mexico takes top prize
    Sir John Major: Negative West End portrayals of politicians put people off voting

    Sir John Major hits out at theatres

    Negative West End portrayals of politicians put people off voting
    Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

    Kicking Barbie's butt

    How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines
    Will Smith's children have made waves with a gloriously over-the-top interview, but will their music match their musings?

    What are Jaden and Willow on about?

    Will Smith's children have made waves with a gloriously over-the-top interview, but will their music match their musings?
    Fridge gate: How George Osborne keeping his fridge padlocked shows a frosty side to shared spaces

    Cold war

    How George Osborne keeping his fridge padlocked shows a frosty side to shared spaces
    Stocking fillers: 10 best loo books

    Stocking fillers: 10 best loo books

    From dogs in cars to online etiquette, while away a few minutes in peace with one of these humorous, original and occasionally educational tomes
    Malky Mackay appointed Wigan manager: Three texts keep Scot’s rehabilitation on a knife-edge

    Three texts keep Mackay’s rehabilitation on a knife-edge

    New Wigan manager said all the right things - but until the FA’s verdict is delivered he is still on probation, says Ian Herbert