Strong state pension vital-Webb

Strengthening state pension provision is key to helping people develop a decent income in retirement, according to pensions minister Steve Webb.

Speaking at the ABI Savings and Protection Conference, Webb outlined his commitment saying "a strong state pension is the foundation for the modern pensions world especially as we move towards a defined contribution market".

Webb said the basic state pension had been in decline for thirty years and restoring the link to earnings would provide a real boost for savings year on year.

He added the increased cost would be partially paid for by raises in the state pension age, enabling people to work longer, as well as the decision to link increases in the state second pension to CPI rather than RPI.

Webb said the decision to use CPI was made because "it works as a better match against pensioners' spending patterns over time and would provide stability".

The state pension would form a strong foundation on which other savings could be built with workplace savings also playing an important part.

Webb reiterated his commitment to auto-enrolment but warned it needs "to be a policy that lasts"l.

Referring to the Commission set up to review auto-enrolment over the summer, Webb said: "It is worth spending three months making sure we have got things right in terms of increasing longevity and the credit crunch.

"If the Commission comes back and says NEST is still the right answer we will go ahead and if they say it needs to change then we will look into it. I don't want this timetable to slip - we need to get people into good quality workplace pensions."