Security in retirement: towards a new pensions system

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This White Paper sets out the Government's plans to reform the structure of the UK pensions system, in the light of demographic changes which will mean that over the next 50 years there will be only two people in employment for every one person in retirement, compared with the current ratio of four to one. The reforms draw on the recommendations of the Pensions Commission (1st report (ISBN 0117027804) published in October 2004, 2nd report (ISBN 0117036021) published in November 2005, and more information on the final report is available at The proposed reforms are designed to meet five key tests of personal responsibility, fairness, simplicity, affordability and sustainability; and proposals include: i) to simplify the State pension system and tackle the problem of pensioner poverty, including a commitment to restore the link between the state pension and average earnings by 2012 subject to affordability and the fiscal position, or by the end of the Parliament at the latest; ii) to promote a culture of long-term saving for retirement, including a new scheme of personal accounts with automatic enrolment of employees and matching contributions from employers; iii) to reform the contributory principle for the State pension to create a fairer system for women and carers, including reducing the required number of years of National Insurance contributions to qualify for a basic State pension to 30; iv) to gradually raise the State pension age in line with gains in average life expectancy and to establish measures to support extended working lives; and v) to streamline the regulatory environment in order to reduce administrative burdens on employers who provide good occupational pensions.

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