According to Work and Pensions Secretary Andrew Smith, people should be allowed a gradual downshifting from work into retirement. “Many people resent the sheer cliff edge between work and retirement – that on Friday they are deemed to be valuable members of the workforce but the following Monday they are shuffled off into retirement.

“We need to give people real opportunities and incentives to enable them to stay in the work place for longer – where they want to. As well as getting rid of the perverse incentives to retire even when it might suit people to carry on working, perhaps part time, for longer.”

Mr Smith said that the overall pensions framework is the right one and the Government will continue to build on the changes already made. “Changes have to be worthwhile for employees to save, confident in what they will get in return, and easy for employers to contribute. We need a framework that builds partnership in pension provision not a mutual aversion to responsibility.”

He added: “I applaud partnership between trade unions and business. I have seen what can be achieved when we have worked together on the New Deal. If there was ever an area where we needed to build and strengthen partnership for the country’s future, it is on these crucial questions of ensuring security in retirement for all.”

Mr Smith said: “Reform should be based on the principles of:
– enabling people to make better informed choices in saving for their retirement
– ensuring better information to help people make more meaningful choices
– providing a range of simpler products
– cutting red tape
– encouraging partnership, and
– removing perverse incentives by aligning pensions policy with the employment and active ageing agenda.”