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Final pensions report
Lord Turner has said reforming the pensions system will have "significant implications" for tax, national insurance and public spending.
The head of the pensions commission said its proposals for a more generous state pension would lead to a higher proportion of gross domestic product being devoted to pensions.
But he warned that if the state pension system was not reformed, and the spread of means testing reduced, its proposals for a new system of private pension saving would be undermined.
In its previous report, the commission proposed increasing the state pension in line with earnings, rather than prices, and raising the state pension age to as high as 69 by 2050 to help finance this.
Stakeholder Response: Investment Management Association
Richard Saunders, Chief Executive of the Investment Management Association said:
"National Pensions Day resulted in more than 80% of participants agreeing that they will have to save more for their retirement and over 70% indicating that auto enrolment was the way to encourage contributions.
"IMA, therefore, continues to believe that, if the government decides to go ahead with the National Pensions Savings Scheme (NPSS), the right model is one of independent governance combined with central administration and institutional asset management.
"The Pensions Commission clearly agrees and indicates that its model, with the refinements proposed in IMA’s submission, best meets the objective of increasing retirement saving by those who do not currently have any non-state pension provision.
"To ensure the success of the NPSS it will be vital to drive down costs by ensuring high participation rates, a point made in IMA’s earlier submission to the "Timms Challenge".
"However, while low costs and minimum administrative burdens for employers are crucial to take up, public confidence in the NPSS is also a pre-requisite.
"As the Pensions Commission notes, the IMA has proposed governance arrangements that would help to achieve such confidence.
"The NPSS will need to be straightforward for consumers and employers alike, and will need carefully thought out governance arrangements.
"If properly structured, with an independent board and professional institutional fund management, it can be both a consumer champion and the most effective means of delivering the Commission’s objectives.
"We agree however with Lord Turner that a simpler, more understandable state pension system is essential to the success of the NPSS."
Stakeholder Response: AMICUS
Derek Simpson, Amicus’ General Secretary, said: "According to the Turner Report unless we act decisively now, by the middle of the century three quarters of pensioners will have to rely on benefits to exist.
"Compulsory contributions to occupational pension schemes by employers and employees is the only way to tackle the pension’s crisis so we’re disappointed that he is recommending individuals and companies should still have the opportunity to opt out.
"We will also oppose any plans to raise the statutory retirement age which will penalise the poorest people in our society, many of who will die before receiving their pensions.
"The current burden is falling on the victims of the pension crisis not on the perpetrators. If there must be victims the burden has to be shared fairly between employees and employers and the rich and the poor."
Stakeholder Response: WHICH?
Mick McAteer, principal policy adviser at Which?, said: "This report paves the way for a white paper to herald reform of the UK pension system.
"The paper should implement the Commission’s key recommendations - especially the need for an independent National Pensions Savings Scheme (NPSS) – which will make saving for the future affordable and restore confidence in pensions.
"Which? welcomes the general consensus that voluntarism doesn’t ensure enough money goes into the pensions pot.
"Shared contributions between employers and individuals are vital to guarantee properly funded pensions.
"An independent NPSS represents the fairest, most affordable and sustainable way of helping consumers to save for a decent retirement.
"Which? research shows that 40 per cent would have most trust in an independent body to manage their pensions. Without trust there cannot be sustainability.
"The only genuine sustainable consensus is one that eliminates conflicts of interest and creates trust and confidence.
"Consumers will not trust an ABI type scheme after a litany of scandals which have left a legacy of mistrust.
"Our research found that only 11 per cent would trust a financial institution to look after their pension."
Stakeholder Response: Help the Aged
Mervyn Kohler, head of public affairs at Help the Aged, said: "Lord Turner's pensions commission has helped to structure the debate about pensions and point the way to a consensus about pension reform.
"For that, congratulations are in order.
"Addressing pensioner poverty is Help the Aged's priority, and in this respect the pensions commission has not taken the agenda as far or as fast as the we would wish.
"However the sense of direction is on course - it is in securing clear leadership from ministers where the problem currently lies.
"A key issue is to convert the current web of unfair means-tested benefits, which potentially traps half our older population into universal entitlements.
"Means-testing is an inefficient way of getting help to the poorest - up to £3.8bn remains unclaimed each year because of the complexity of claiming many benefits.
"Means-testing also acts as a roadblock to personal pension saving because people with low to average incomes who build up small pension pots may find themselves penalised upon retirement when their own savings count against them.
"Pensioner poverty is far too important an issue to be caught up in the paralysis of political bickering, so the government must get on with the job of setting out how reform to our creaking pensions system will be tackled.
"A fifth of our pensioner population are languishing below the poverty line while many of today's workforce face what could be a very bleak retirement.
"Now is the time for ministers to forge ahead - a failure to do so would be a terrible missed opportunity."
Stakeholder Response: ABI
Stephen Haddrill, the ABI’s director general, said: "We support Lord Turner’s core proposals.
"But we need a speedy and secure way of implementing them.
"The pensions industry has the experience and infrastructure to operate a new savings scheme based on automatic enrolment and employer contributions, without the risks and costs of a new state organisation.
"We are looking forward to further discussions with the government about how this can be done."
Key elements of the ABI’s ‘Partnership Pensions’ scheme include:
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Automatic enrolment into personal pension accounts.
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Contributions of four per cent from employees, three per cent from employers and one per cent from government, through tax relief.
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Employers can choose a pensions company to operate Partnership Pension accounts for their employees, and employees can choose the funds in which their pension contributions are invested.
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An economic regulator to oversee the system, monitoring charges and contribution levels and ensuring that existing good employer schemes are not eroded.
Stakeholder Response: Equal Opportunities Commission
EOC chair Jenny Watson said: "The pensions commission's work has done us a great service by shining a spotlight on the scandal of women's pensions .
"They have ensured that any future settlement must deliver for the millions of women at risk of poverty in retirement.
"We welcome the building blocks of Turner's proposed reforms, in particular the National Pensions Saving Scheme (NPSS), which is flexible and secure enough to cope with people's increasingly unpredictable working lives, giving everyone the change to save at low cost, with compulsory support from their employer.
"Our new research shows that the government could build on these recommendations and target state support at those least able to save – parents, carers and the low paid – delivering a system which lifts people out of poverty and offers everyone the chance of an adequate income in retirement.
"With a target income of up to £160 a week, fully linked to earnings, compared to £130 under the pensions commission's proposals, this uses scarce resources efficiently, with costs around the same as Turner's model.
"Men's working lives are becoming more unpredictable, just as women's have always been, with periods in and out of the labour market.
"This new synergy means that if we get it right for women we get it right for everyone and this is the challenge that Turner has set for the future.
"We look forward to seeing the government's next steps."
Stakeholder Response: Age Concern England
Gordon Lishman, director general of Age Concern England, said: "The government must not squander this golden opportunity to radically reform the pensions system.
"Lord Turner’s proposals stand or fall as a package and must not be watered down.
"The government must now respond quickly with a bold white paper.
"The system must be completely overhauled to guarantee fairness for women, carers, lower income groups and those without access to a decent pension.
"We support Turner’s recommendation for a more generous state pension and believe that automatic enrolment into a National Pensions Savings Scheme would play a crucial role in helping those who are currently missing out, including millions of women, to build up a private pension.
"Long-lasting, radical reform is urgently needed if future generations are to avoid poverty in retirement – but it is essential that the needs of today’s pensioners are not ignored."
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