Britons 'favour universal pension

Most Britons favour the idea of a flat-rate state pension paid to all, rather than a system where payouts are related to national insurance contributions, a pensions group claimed today.

However, the survey, commissioned by the National Association of Pension Funds (NAPF), also revealed many people were unsure how the current system works.

More than half (65%) of those questioned said they preferred the idea of a universal state pension worth £105 a week paid to every pensioner, as opposed to a scheme where individuals receive between £0-£250 a week, depending on how much they earned while working.

And 80% agreed that women should receive the same state pension as men, even if they stayed at home rather than going out to work.

However, there was some disagreement on exactly how universal any new pension scheme should be, with the issue of residency proving particularly contentious.

When asked how long someone should have to live in the UK before they qualified for a state pension, 30% said at least 20 years, 19% favoured 10 years and just 12% said those living here for over five years should qualify.

The research also revealed some level of ignorance about the current state pension system. When quizzed about current pension rules, 44% said state pensions were the same for all retirees and 40% said pension payments were based on earnings. Under the current system, payments are dependent on an individual's national insurance contributions.

Overall, 30% said they thought £105 would be an increase on how much they could currently expect to receive, while 22% admitted they were unsure. In the current tax year, the basic state pension is £82.05 for single pensioners and £131.20 for couples.

The NAPF's research was based on its proposals for a citizen's pension, originally outlined in October 2002. The scheme would replace current state provisions with a single, universal, flat rate payment worth at least £105 a week at current prices and rising in line with earnings.

As well as supporting the principles of the proposals, those questioned suggested such a scheme may encourage them to make their own retirement provisions.

Over half (51%) claimed having a fixed-rate pension would encourage them to save more than they do currently, while 42% said it would encourage them to continue working beyond state pension age.

"There can be little doubt about consumers' lack of faith in the current, over-complicated pensions system, said Christine Farnish, the NAPF's chief executive. "People are crying out for a simpler, fairer system, and the citizen's pension addresses that need.

"If ministers were to decide to pursue the citizen's pension idea, this research suggests they would be pushing at an open door as far as the public are concerned."

The NAPF claims that eight million pensioners, currently receiving less than £105 a week from the state, would immediately gain from its proposals.

These would include over 1.5 million pensioners currently entitled to pension credit who do not receive it.

It claims the proposals would also benefit millions of female pensioners who would satisfy residency criteria for the citizen's pension but who are not entitled to a full pension under the present system.

It says that at the outset the new scheme would cost the same as the current system.

By 2030, it proposes that the increasing long-term cost of could be met by some combination of lower state expenditure on areas other than pensions; higher tax or national insurance contributions; an increase in state pension age; or less generous tax relief.

The Pension Commission is currently investigating ways to overhaul the state pension scheme and encourage people to save for retirement. It is due to report in autumn of this year.