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Reports and Briefing Notes

Foundation Pension: A PPI evaluation of NAPF proposals

The NAPF commissioned the PPI to evaluate the NAPF’s proposals to introduce a Foundation Pension. This report considers three possible levels of a Foundation Pension and provides estimates of the financial costs of each and analyses ways of making the system more affordable in the UK.

The National Association of Pension Funds has proposed reform of the state pension into a simple ‘Foundation Pension’. The Foundation Pension, as proposed by the NAPF, is a flat-rate benefit given to everyone of pension age, regardless of income or wealth, on a simplified contributory basis. This structure has been proposed to avoid the disincentives to save inherent in the means-tested environment, and aims to reduce pensioner poverty.


Chapter one describes how the Foundation Pension works and what the benefits of this approach might be.

Chapter two uses hypothetical case studies to explore how individuals of different income levels could be affected by the reforms to state pension.

Chapter three gives an overview of the financial costs of each Foundation Pension level.

Chapter four looks at the implications of increasing the State Pension Age (SPA) and increasing National Insurance contributions as a way meeting the cost of the Foundation Pension, and how these changes might affect individuals.

Chapter five examines the Foundation Pension introduced at £8,000 in 2010 earnings terms in more detail, looking at how the change could impact on the provision of means-tested benefits.

Chapter six examines the transition to the Foundation Pension.



Executive Summary

Executive Summary

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