The state pension suffered a "serious decline" in its value in the past 30 years, research shows today.
The basic state pension, which is 100 years old this month, is now worth just 16% of average earnings, compared with 26% in 1980, according to a new book, 100 Years of State Pension.
At the same time, three-quarters of final-salary pensions schemes have closed to new entrants, as private sector pension provision has declined, leaving people increasingly reliant on the state pension.
The book also warns that inequalities during people's working lives are carried over into retirement, with many workers not eligible to join a pension scheme, such as low-paid, part-time workers and non-employed carers of children and the elderly.
Colin Redman, who co-authored the book, said that the current financial meltdown had exposed the flaws in the pension system.
He said: "The serious decline in the value of the basic state pension over the last 30 years and the more recent decline in final- salary occupational schemes have created a huge gap in provision. Individual and group-sponsored money purchase pension plans with performance linked directly to the stock market cannot, on their own, plug this gap.
"If people on low and medium incomes are to be encouraged to save for retirement they need a savings vehicle with low charges and low volatility."
The book said the National Insurance system should be modernised, as it could provide better pooling of risk, lower costs and greater stability and certainty for ordinary people to save for adequate pensions.
It added that tearing up pensions legislation every few years, as is done in the UK, failed to provide the continuity that people needed to plan for their retirement during their working life.
Instead it called for political parties to seek to develop long-term, ongoing cross-party agreement to create a sustainable structure of state, occupational and private provision.
The first pension payment of five shillings (25p) a week was made in January 1909, after the Old Age Pension Act was passed.
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