One for the civvies... Dull? Of course. Essential? 'Fraid so. The latest... The government issued a White Paper on pensions last week announcing changes it will make to the pensions system to modernise and (hopefully) improve it. This follows a three-year investigation by Lord Turner whose final report was issued in April. The idea is to increase personal savings and reduce the growing dependence of pensioners on means-testing. Put simply, the new proposals represent a trade-off in a bid to prevent a 'pensions timebomb' as we move towards an older population. We are likely to retire later but when we do, the pension benefits should be better. The main points? There were quite a few. I'll try to keep them short and in English. State pension changes.... The basic state pension will be increased in line with average earnings, rather than inflation, making it more generous. This will probably happen from 2012 but the precise date will be announced in the Autumn. No-one currently aged over 47 will be affected by this change. The state pension age for men and women will rise gradually: from 65 to 66 from 2024; to 67 from 2034; and to 68 from 2044. The number of years of national insurance contributions needed to qualify for a full state pension will be reduced to 30 years for both men and women (it is currently 39 for women and 44 for men). Personal savings accounts introduced.... From 2012, we will have the chance to enroll in a new low-cost personal pension savings account called a National Pension Savings Scheme (NPSS), if it the most suitable option. All employers will have to offer auto-enrolment in the account scheme to their workers unless they have a more generous occupational pension scheme which already enrols workers automatically. Employers will have to make a compulsory contribution of 3% of salary to the scheme. This will be phased-in over three years and consideration will be given to a longer period for smaller businesses. Employees will contribute 4% to the scheme and the government 1%. The money will be then invested on behalf of employees in a variety of savings vehicles, such as investments in stocks, bonds, and property. The details have yet to be worked out with the pensions industry. Self-employed and unemployed individuals will be able to join the scheme on their own account. Other changes.... Anyone caring for children or the disabled will be able to build up an entitlement to a state pension without having to make a minimum level of national insurance contributions. The government says this, together with the other state pension changes will mean that 70% of women will be eligible for a full basic state pension by 2010, as opposed to 30% now. There is renewed hope for the 85,000 people whose work pensions have gone bust. The Financial Assistance Scheme (FAS), designed to help, is to be expanded so that many more claims can be made. The current system of "contracting out" from the State Second Pension will be abolished for defined contribution schemes (but not for traditional final salary occupational pensions). This will happen when the earnings link is restored for the basic state pension. The State Second Pension will evolve into a flat-rate top-up pension by 2030. Does this mean I don't need to keep saving? Sorry, you're not that lucky. If you plan to work late and rely on whatever the state has to offer then you are likely to be eating a lot of baked beans in retirement. If holiday villas and new cars are part of your plans then save as much as you can afford for as long as you can. So I am likely to be working well into my sixties then? Not necessarily. The idea is that you wait longer for your state pension, not that you absolutely have to continue work. If you can afford to give up work earlier then you will still be free to do that. So how does all this affect me? If you're 27 or under...you will not be able to collect your state pension until you are 68. Those aged 28 now will collect it between their 67th and 68th birthdays. Restoring the link between state pension and earnings will provide you with an extra Â£40 per week if you retire in 2050. The big message is keep saving as much as you can as soon as you can if you want to retire sooner rather than later. If you're between 29 and 37.....you won't be able to collect your state pension until you are 67 years old, although if you are already 37 years old, you will get your pension between the 66th and 67th birthday. The link between the state pension and earnings will help and you will also have the chance to save in a NPSS. If you're between 38 and 46......from 2024 you can collect your state pension once you are 66 years old - unless if you are 46 already, then you will be able to collect your state pension between the 65th and 66th birthday. If you have any gaps in your national insurance contributions, you will benefit from the lower minimum qualifying levels for the state pension. If you are over 47.....then the White Paper is likely to be good news. You will still be able to collect your state pension at age 65 and you will also benefit from the restoration of the link between pensions and earnings. If you are very near your retirement, you may not see a huge difference, because the earnings link is not due to be restored until the next Parliament. 2012 is a long way off, is there a chance this could all change again? It's highly unlikely as the White Paper has 'cross-party support'. Having said that.... there are some key issues which various parties feel strongly about and will no doubt continue to debate. The Conservative party has expressed alarm at the spread of means-testing in the pensions system. Lib Dems Pensions Spokesman Mark Oakshott, branded the White Paper 'mean and timid', saying it ignores the divide between generous public sector pensions and those having to rely on Pensions Credit. What do the experts say? Christine Farnish, Chief Executive of the National Association of Pension Funds: 'NAPF welcomes the proposals and the Governmentâs aim to build a simpler, fairer pensions system which will enable everyone to build a secure retirement income. Provided we get the details right, todayâs proposals should give certainty and security to tomorrowâs pensioners and promote a step change in savings behaviour. Which? chief executive, Peter Vicary-Smith: 'The government has resisted strong industry pressure in showing its commitment to a low cost NPSS. It is going down the only path that will deliver a long-term solution to Britain's pensions crisis - putting the interests of consumers first.' Trevor Matthews, CEO, Life & Pensions, Standard Life: 'There was never going to be an easy answer to this problem but todayâs White Paper is a reasonable outcome. Looked at in its entirety, the reform package is as good as we could have realistically hoped for and a lot better than we might have expected.' Independent pensions guru, Martin Campbell: 'This was a wonderful chance for Downing Street to do something positive for our future for a change. Blair wanted to take a step in the right direction, but clearly Brown has held him back. Yes, restoring the link to earnings is a good move â but by the time Brown lets this happen, if he ever will, it will take donkeyâs years for the State Pension to climb back to a decent level. In the meantime, half the population is left doubting whether it is in their interests to save or not, for fear of eating into the means-tested benefits they might otherwise have got. This reform is 100 miles short of the brave, bold and âbig fixâ that Government spin would have us believe it is.' Alex Brummer, Daily Mail City Editor:The Pensions White Paper is a huge disappointment. Far from providing a blueprint for the retirement savings of future generations it fudges many of the most difficult questions. The only thing which emerges with any certainty is that everyone will have to work longer and harder to enjoy a comfortable old age.' Matthew Elliott, TaxPayers Alliance campaign: 'It's disgraceful that there's one rule for MPs and another rule for ordinary taxpayers. If MPs are serious about pensions reform, they should lead by example and reform their pensions arrangements rather than expecting us to sub their gold-plated lifestyle with higher taxes.'