The Pensions Crisis

Britain's pension system is in a mess.

Occupational pensions, once the "gold standard", are being undermined, by sharp reductions in employer contributions and the closure of final salary schemes to entrants.

The Government's "stakeholder pensions" have largely failed to reach the target market of people on modest earnings with no private pension provision.

The state pension system is increasingly complex, dependent on mass means-testing. According to a recent report, the Government's means-tested pension, the Minimum Income Guarantee, is not claimed by up to a third of entitled pensioners, with average losses of £12.80 a week. Its replacement, Pension Credit, is expected to be worse.

The Government inherited problems, for example, the mis-selling scandals, but tinkering and inactivity have made things worse. The Government now plans a "Green Paper" on ideas for solving the pensions crisis - the second in four years and an admission of failure.

We need radical reforms.

We could scrap tax rules preventing people from drawing a pension whilst working part-time for their employer. We should scrap inflexible rules requiring people to buy an annuity by the age of 75. We should consider making an employer contribution to employees' pension schemes mandatory.

On the state pension, we must tackle problems faced by women pensioners, many of whom are not aware their rights may have been reduced. We should enhance the basic state pension, especially for older pensioners.

This would be a start, supporting today's pensioners whilst giving hope for future generations.