Does means-testing cause poverty? Discuss ….

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    peterdelamothe
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    The use of means-tested benefits should be curbed if plans to boost UK savings are to succeed, the Pensions Policy Institute (PPI) has said.
    The government’s Pensions Commission has said a National Pensions Savings Scheme (NPSS) should be set up, which people are automatically enrolled in.

    But the PPI warned that some people saving through the NPSS could lose out on means-tested benefits.

    The state pension could be boosted and means testing cut, the PPI added.

    “This adds to the need for the government to consider bolder state pension reform that would reduce the scope of means-testing from its current level – not just contain its future growth,” Alison O’Connell, director of the PPI, said.

    Contention

    The role of means-testing in the UK pension system is reportedly a bone of contention in Whitehall.

    The Chancellor Gordon Brown is said to favour the current system of a basic state pension topped-up through means-tested Pension Credit.

    Pension Credit benefits are reduced if the claimant has substantial personal savings.

    The Pensions Commission has said that over time more and more Britons will have to rely on claiming Pension Credit and that it should be replaced with a higher state pension topped-up through the NPSS.

    The government will set out what it plans to do about UK pensions when it publishes its White Paper during the next few months.

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