What the report means for the future of pensions

The long-awaited Turner Report on the pensions crisis was published on 30 November 2005, outlining how pensions should be handled in the future.

Adair Turner's Pension Commission report has set out a new direction on pensions for decades to come. The media has focused on the changes to retirement ages - which are set to rise to 66 by the year 2030, 67 by 2040 and 68 at 2050. Turner also proposes that the Basic State Pension would increase in line with earnings instead of prices from 2010 bringing a boost in income for pensioners, with hope of a reduction in means-tested benefits such as Pension Credit which the Commission believes act as a disincentive to saving.

After some hard lobbying by Help the Aged, among others, Adair Turner has decided that entitlement to pensions should be based on residency instead of contributions from the age of 75, while the complex State Second Pension (S2P) would eventually become a flat-rate additional payment. Turner also advocates the setting up of a National Pension Savings Scheme (NPSS) with workers set to pay 4 per cent of their salary into their retirement pot, alongside additional contributions from Government and employers.

Mervyn Kohler, Head of Public Affairs at Help the Aged welcomes the report as a landmark document: 'What's most remarkable is that it reflects the growing consensus around the need for a decent state pension linked to earnings, and the inadequacy of a means-tested alternative as a sustainable, long-term approach. The proposals for reform are welcome but urgent if we are to address poverty in our present older generation.

'Kicking the report into the long grass of political sniping would therefore be a failure of epic proportions.'