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The Actuary The magazine of the Institute & Faculty of Actuaries

Pensions white paper

The UK government published its proposals for the future of pensions on 25 May, with the following key elements:

  • a national system of low-cost pension accounts with a minimum compulsory employer and employee contribution;
  • from 2012 or later basic state pension link to earnings increases will be restored;
  • state pension age (SPA) to be increased, eventually to 68;
  • shorter contribution period to qualify for full state pension – helping women in particular;
  • second state pension (SSP) to become flat rate by 2030;
  • contracting-out to be abolished for defined contribution schemes and personal pensions.Reaction to the proposals in principle was almost universally positive, which The Economist attributed to the hard work of Lord Turner’s Pensions Commission in preparing the ground.

More information at www.dwp.gov.uk/pensionsreform. The government is consulting on the proposals in the paper and will consider all comments received by 11 September 2006. It will publish a response within three months of that date.