A new Citizen’s Pension, worth £100 a week and rising in line with earnings has been propoesd by the National Association of Pension Funds (NAPF).

In a policy paper “Pensions – Plain and Simple” the NAPF sets out a number of key reforms which would boost incomes for the poorest pensioners, strip away complexity, encourage consumers to save more, remove barriers to workplace pension provision, and improve consumer understanding and protection.

The proposals include replacing the present tangle of State provision with a single, universal, flat rate payment worth about 22% of average earnings and rising in line with earnings. Beyond that, individuals will be encouraged to make extra provision, either through the workplace or with personal or Stakeholder pension providers.

Key recommendations

– replace the tangle of existing State pensions with a single, universal, flat rate Citizen’s Pension worth £100 a week at present and rising in line with earnings;

– abolish restrictions on retirement age, but raise the age at which the new Citizen’s Pension becomes available from 65 to 70 between 2020 and 2030 – allowing the new, more generous pension to be provided at no additional cost to the public purse

– offer more generous tax treatment for longer-term savings, rewarding pension savers more than savers in ISAs or other short-term savings vehicles

– abolish rules limiting individuals’ ability to join more than one pension scheme

– offer better pension protection for occupational pension scheme members nearing retirement age whose employer goes bust

– remove rules preventing employees continuing to work for the same employer while drawing down part of their pension

– abolish rules restricting the amount individuals can pay in, or receive in benefits from, their pension scheme.

Launching the paper, NAPF Chairman, Peter Thompson, said: “Today’s pension system is weighed down by red tape, jargon and complexity. Because of this, too many of today’s workers are put off thinking about pensions, storing up potentially massive problems for the future. The proposals we have published today tackle this problem head-on. They would replace the present over-complicated mix of State pension provision with a single, flat rate Citizen’s Pension, payable to everyone, set at a high enough rate to help more pensioners out of poverty, and linked to rises in earnings rather than prices. This would be achieved at no extra cost to the public purse.

“Today’s workers would then know exactly where they stand. They will also know that if they wish to enjoy a more comfortable income in retirement, they must make additional arrangements, either through the workplace or with a personal pension provider.

“We have also set out a series of practical and affordable steps towards encouraging employers to offer – or to continue to offer – workplace pensions, and encouraging employees to make the most of them. And by boosting the security of those in workplace pensions, particularly those approaching retirement, these proposals will go a long way towards restoring consumers’ faith in the pension system.