Proposals from the National Association of Pension Funds (NAPF) could see two million pensioners removed from means-tested benefits, and employees retiring on two-thirds average earnings.

The UK body has set out its plans, which build on the 2012 reforms, in Fit for the future - NAPF's vision for pensions. It aims to ensure people have an adequate retirement income far into the future by creating a new, simpler state pension, the Foundation Pension.

This main proposal would see the Foundation Pension, worth £8,000 a year, lift two million people out of means-testing, and provide them with a pension worth one third of average earnings.

The NAPF would also revitalise workplace pensions with new designs to help employers run schemes, and propose that consideration be given to increasing the new statutory minimum contribution from eight per cent to 11 per cent, ensuring everyone has the opportunity to receive a workplace pension worth around a third of their former earnings.

Finally, a permanent, independent Retiring Savings Commission would be established to remove the politics element from pensions, and ensure a long-term and enduring political settlement.

"Our proposals are designed to create a pension system which is fit for the 21st century," commented Joanne Segars, NAPF chief executive. "They increase the value of the state pension for everyone, radically reduce concerns over means-testing, and increase the value and quality of workplace pensions. The Government's 2012 reforms are a major step forward and our proposals complete the task."

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