Department for Work and Pensions
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Government committed to consensus on details of personal accounts
The Government is committed to maintaining momentum on pensions reform as it takes forward proposals for a system of personal accounts, Minister for Pensions Reform James Purnell said today.
A year on from the National Pensions Day, Mr Purnell said there was now broad agreement on proposals such as restoring the earnings link and raising the State Pension Age.
Mr Purnell said:
"A year ago we were seeking people's views on raising the State Pension age; linking the State Pension to earnings; making the system fairer for women and carers; and introducing automatic enrolment into a workplace pension.
"The debate has moved on considerably in the last year. There is now broad consensus around these proposed changes - which form the main building blocks of the Government's pension reforms.
"The International Monetary Fund recently welcomed our reform package, saying it would help to ensure both adequate saving for retirement and fiscal sustainability.
"Going forward, we want to secure the same degree of consensus around more detailed issues such as the charging structure for personal accounts; the level at which contributions into personal accounts should be capped; and the information needs of people saving in personal accounts."
Mr Purnell said that there would be good incentives to save into personal accounts because individuals' contributions would be matched by an employer contribution and tax relief.
The DWP has received 60 submissions from organisations in response to the personal accounts consultation period.
Mr Purnell added: "We will consider all these views carefully before publishing our response in the summer."
Notes To Editors
1. The deadline for responses to the personal accounts White Paper was on Tuesday, March 20.
2. The White Paper, Personal accounts: a new way to save, is published today http://www.dwp.gov.uk/pensionsreform/new_way.asp
3. More information on pensions reform is available at: http://www.dwp.gov.uk/pensionsreform/
National Pensions Debate - One Year On
In the year since National Pensions Day the Government has worked to move forward that initial, emerging consensus.
The National Pensions Debate culminated in six simultaneous consultation events across the country on March 18, 2006. More than 1,000 members of the public took part.
Participants in the debate told us:
* They accepted the need to increase working life because of the pressures of an ageing population.
We have included measures in the Pensions Bill to gradually increase the State Pension age to 68 by 2046. The proposed increases will broadly maintain the proportion of adult life spent over State Pension age at around 30 per cent - as it is today.
* They wanted a State Pension system that rewards contribution to society, including non-work activities such as caring.
We have made delivering fair outcomes for women and carers a key part of our reforms. Under the new system, a life of social contribution in the form of unpaid caring will for the first time be recognised and rewarded in the same way as a life of work. And the reduction in the number of qualifying years required for a full basic state pension means that there will be more flexibility for everyone to combine various patterns of caring and working, without damaging state pension entitlement.
* They agreed we needed to encourage people to save more for their own retirement, whilst ensuring pensioners were not poorer as a result.
We have provided a solid platform for saving by making a commitment to restoring the link between the Basic State Pension and earnings.
We believe that with the introduction of auto-enrolment and personal accounts most people will have clear incentives to save and to take personal responsibility because employees' contributions will effectively be doubled thanks to an employer contribution and tax relief.