The Work and Pensions Secretary Iain Duncan Smith is due to unveil reforms to the pension system in Parliament today. The Green Paper has been put together after he condemned the current system, calling it “complex” and in “crisis”.
Iain Duncan Smith’s radical proposals include introducing a flat-rate £140-per-week pension for all pensioners. This will raise the current £97.65-per-week pension that they currently receive.
However, the proposals also abolish means-tested credits that over half of all pensioners receive. OAPs can receive up to £132.60-per-week under the current system.
Iain Duncan Smith told Sky News’ Murnaghan programme on Sunday 3 April that the means-tested credits act as a disincentive for people to save for their retirement. Currently seven million people in the UK do not save anything for their retirement and it is today’s younger generation that will have to pay for this debt.
He said the current pensions system is too complicated; people don’t understand it and this is part of the problem. He said people need to understand it if they want an income when they are retired. The proposals aim to introduce a simplified system so people know what to expect and can save to supplement their state pension in retirement.
The proposals are supported by the Government’s plan to require employers to automatically enrol their employees on a private pension scheme in order to boost individual savings for retirement.
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