It’s not expected to be published until next month but already the pensions bill is coming under fire for not going far enough.

Restoring the link between the basic state pension and earnings and making it easier for women to build up a pension – by reducing the number of qualifying years and reforming the system of credits for looking after children – have been welcomed as “positive changes” by the National Association of Pension Funds (NAPF).

But its chief executive Joanne Segars said: “The expected reforms do not go far enough. There will still be too much complexity and too much means-testing.

“The state second pension reforms are likely to increase costs for employers
offering defined benefit schemes. Ministers should take this into account when
they consider our proposals for strengthening good workplace pensions.”

According to NAPF the main problem is that the government is proposing to maintain the use of both the basic state pension and the state second pension – which are subject to different rules for accrual and indexation.

NAPF believes the government should consider combining the two state pensions once the reforms have bedded down.

It also says that it’s important not to undermine good quality workplace pensions and believes the proposals for reform of the state second pension are likely to reduce the value of contracted out rebates for defined benefit schemes, which would add to the costs faced by employers.

NAPF has called on the government to:

• Support its proposal for a good workplace pension quality mark




• Provide fiscal incentives that would encourage high employer contributions




• Design the new system of personal accounts to minimise adverse effects on existing pension provision.

One area where professional bodies are differing from the public view is the change to retirement age, which NAPF sees as “unavoidable”.

The CBI agrees. A spokesman said: “An easy-to-understand state pension should be the bedrock for any sustainable long-term pensions settlement but the quid pro quo is that the entitlement age will have to rise.

“We support the Government’s agenda to extend working lives but, where necessary, it must help older workers brush up their employment skills.”