28 April 2006
Former social security minister Frank Field this week presented his recommendations on preventing a pensions crisis to Prime Minister Tony Blair.
Field's Pensions Reform Group has suggested the introduction of a funded scheme, under which the wealthy would partially subsidise poorer sections of society through higher contributions.
The PRG recommendations, presented to Blair on April 24, propose a universal, protected pension that combines the basic pay-as-you-go state pension with a new, funded scheme boosted by investment returns.
It is in contrast to the largely tax-funded package recommended by Lord Turner's Pensions Commission last year.
Launching the report, Field said: 'The real choice [between the suggested reforms] is whether we think a tax-financed system or one based on investment will last.
'The Turner proposals ask people to pay more taxes to fund pensions now and hope that other people will be ready to pay taxes 40 years down the line to pay for their pensions.'
The new element of the PRG scheme would be funded partially through redirecting National Insurance rebates currently paid into the company or private pension schemes of individuals who have contracted out of the existing State Second Pension. Under Field's proposals, that cash would be paid into an independently managed investment fund.
The PRG claims that its system would produce a universal and earnings-linked pension worth £130 per week.
But Whitehall sources said that both Number 10 and the Treasury view Field's recommendations as potentially expensive.
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