Wealthy pensioners should not pick up the state pension by right but face a means-test to see if they really need the money, says a right-wing think tank.
The think-tank, Civitas, also suggests everyone should be forced to save into a pension by law.
Writing on the Tory party web site, Professor Peter Saunders, a sociologist who compiled the report, argues that the government cannot afford to keep paying pensions to everyone.
Saunders wants to see pension rules tightened up to stop workers opting-out of the state enrolled pension scheme and that everyone should take on the responsibility of proving for their later years.
The result, he writes, is the government would only provide a benefits safety net for the poorest pensioners.
“Means testing pensions is sensible, desirable and possibly the only unavoidable policy to let the state target paying benefits with more focus,” he said.
Unfair and unaffordable
Saunders did agree that state pensions and benefits should continue for workers who have already paid national insurance contributions.
The logic behind Saunder’s comments is that people who have not paid national insurance have a right to claim benefits at the same rate as those who have made full contributions is unfair and unaffordable.
He also points out that few national insurance payers have any idea where their money goes.
In another report, by the Centre of Policy Studies, analyst Michael Johnson claims the local government pension scheme is on the brink of collapse.
He gives a list of suggestions that could local authorities of up to £860 million a year and brands them as ‘woefully inefficient’.
The research reckons the scheme has £200 billion of assets under control for 5.2 million members, but that 101 funds that make up the scheme are underfunded by local authorities.
Death spiral
“These funds will publish annual reports during the next few months,” said the report. “Most are likely to confirm that the scheme’s financial health is deteriorating as the weakest funds erode assets to meet pension payments.
“With no prospect of recovery, they are probably in a death spiral, heading to an unfunded status.”
The study goes on to explain that local government pensions need a complete overhaul to root out lax governance and poor management.
Suggested improvements include switching assets from separate funds into one superfund that would track stock market returns and management mergers to cut unnecessary duplication.
The Local Government Association, an umbrella group for councils and other public authorities, said many of the reforms were already in progress
