A think tank led by former Reform operations chief Jonathan Brown has published a paper calling for replacing the state pension with a ‘retirement safety net’.
The Centre For A Better Britain paper proposed introducing an Australian-style, non-contributory, means-tested system to replace the state pension, while preserving all existing state pension accruals. Additionally, it called for capping the ‘triple lock’ uprating formula at the growth in the working-age tax take, essentially a single lock system.
The report went on to claim that fiscally, the Office for Budgetary Responsibility projections show debt-to-GDP rising materially over the coming decades on current policy to a “clearly unsustainable” level, with the largest pressures coming from health, social care, and state pension spending.
The CFABB paper also claimed that while auto-enrolment has been a success, but contribution rates remain too low to deliver adequate retirement income. It should therefore become a ‘Lifetime Investment Account’, with higher contributions, to improve retirement outcomes and increase the pool of long-term capital available to invest in Britain.
In turn, this Lifetime Investment Account would go on to replace the state pension, as laid out by the policy paper.
Brown says: “While we believe that the multiple reforms suggested form a compatible and cohesive whole, we recognise that not all of them will be, especially in the short term, politically palatable to parties. It is the job of an independent think tank to push the opinion window on such matters and we hope ultimately our proposals, in part or in full, will be implemented by whoever has the privilege to govern our nation over the coming years.
“This is a time for courage: no meaningful change can be implemented without cutting across the interests of the status quo.”
The paper also called for closing local government pension schemes to new entrants and capping pensionable pay for higher earners, a move which will supposedly “halt the open-ended accumulation of taxpayer liabilities” and enable the public sector also to gradually move onto the proposed Lifetime Investment Account.
