Personal Accounts: Prime Minister's Foreword

There has long been recognition of the need to overhaul our pension system for a society where we all live longer. But whilst significant reforms have been introduced since 1997, a lasting settlement needs to be built on the foundations of a strong national consensus.

This is why we set up the Pensions Commission to find how our society can provide an affordable and sustainable pensions system for future generations. Its report, published a year ago, proposed the biggest shake-up of both state and private pensions seen for half a century. It involved, as expected, difficult decisions for everyone – for Government, business, the pensions industry and individuals. But the report also set out in stark terms the consequences of continuing to duck the challenge.

Over the last year, we have worked hard to forge a national consensus around these recommendations, culminating in the White Paper published in May. It set out proposals for a modernised state pension system to provide a solid foundation of support in retirement. Matched by a gradual increase in the State Pension age to reflect increasing life expectancy, it will provide more generous State Pensions and fairer treatment for women and carers. These measures are in the Pensions Bill currently going through Parliament.

Today we build on the Commission’s proposals for reforms to promote private savings. A new system of personal accounts will extend the benefits of low-cost saving to those without access to a good occupational pension. For the first time there will be a matching compulsory employer contribution. We’ll make sure individuals do not miss out by automatically enrolling them into the scheme.

These are radical reforms. But they are necessary to put in place a sustainable, affordable and trusted pensions system which will meet the needs of the country and future generations by helping security and dignity for all in retirement.

The Rt Hon Tony Blair MP
December 2006