SCHOOL LEAVERS TO WORK UNTIL AGE 68
PUBLISHED: 15:51 06 June 2006 | UPDATED: 10:17 06 May 2010
SCHOOL leavers face working until they are 68 under reforms to the pension system announced by the Government. In its long-awaited pensions White Paper, the Government said it would begin increasing the state pension age to 66 from 2024, rising to 68 from
SCHOOL leavers face working until they are 68 under reforms to the pension system announced by the Government.
In its long-awaited pensions White Paper, the Government said it would begin increasing the state pension age to 66 from 2024, rising to 68 from 2044. The move will help pay for restoring the link between the basic state pension and earnings from as early as 2012, subject to affordability.
The Government also announced plans to introduce a National Pensions Saving Scheme (NPSS) into which workers would automatically be enrolled in 2012.
The Government said increasing the basic state pension in line with earnings rather than prices would double its value by 2050. It said it planned to restore the link in 2012, depending on its fiscal position, but it would do so by the end of the next Parliament at the latest.
It also planned to reduce the number of people on the means-tested Pension Credit from 40 per cent now to around a third by 2050.
The number of years needed to qualify for a full basic state pension will be reduced to 30 from 39.
Measures will also be introduced to enable people caring for children or disabled people to build up entitlement to the basic state pension without having to make a minimum level of contributions.
The Government said these reforms should help increase the number of women entitled to a full basic state pension from just 30 per cent now to 70 per cent by 2010.
The Government said it would introduce a new scheme of personal accounts similar to the NPSS recommended by the Pensions Commission chaired by Lord Turner.
The Government said employees would pay in four per cent of their earnings between £5,000 and £33,000 a year, with companies contributing three per cent and one per cent coming from the Government through tax relief. It acknowledged that the introduction of compulsory contributions may be difficult for employers, costing them around £26 billion a year, but it said it would offer support.