Deal to help pension crisis
The chancellor of the exchequer and the prime minister have allegedly struck a deal that could bring some financial relief to the growing pension crisis, according to reports.
Following months of talks, Tony Blair and Gordon Brown are thought to have agreed that a link between pension payments and average earnings will be restored in 2012.
This was one of the key recommendations of the report released by Lord Turner's Pension Commission late last year, although the commission suggested the date of 2010.
The move, originally challenged by the chancellor on the grounds of affordability, should mean pensioners will receive higher pay-outs in the future. .
Part of the funding is expected to come from raising the state pension age to 68 by 2050 – especially if life expectancy continues to increase.
Currently pensions increase each year in line with inflation and Gordon Brown was reportedly keen to keep it that way.
Other recommendations from the Turner report include an immediate reform and improvement to the state pension and reducing means testing in favour of a higher basic state pension payout for all.
The government will publish its white paper on pensions later this month.
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