Bigger pensions for workers call

People who claim no unemployment benefit during their working lives should be rewarded with bigger pensions, a think tank pamphlet has proposed.

The paper, published by Politeia, recommends a system of individual savings accounts which could be debited when the unemployed claimed welfare.

Those that do not make any claims by retirement would then have a bigger pension, authors Peter Birch Sorensen and Professor Arij Lans Bovenberg suggest. Those in deficit would receive a standard public pension.

They say the scheme would protect people who would not otherwise save, incentivise work and continue to look after those at the bottom end of the scale.

Both economists, Prof Sorensen is the chairman of the Danish Economic Council and Prof Bovenberg is scientific director of Netspar at Tilburg University.

But the Department for Work and Pensions pointed out that the system would present its own expense.

A spokesman said: "We will read the full report with interest. However the proposal to increase pensions for those who have not experienced unemployment, while not reducing them for those who do, would clearly have significant fiscal and practical implications. It is difficult to see how this could be achieved without higher taxes.

"The introduction of personal accounts in 2012 will already address the main issue here, by ensuring that those in work who do not currently have access to a workplace pension scheme will be automatically enrolled into the scheme and will receive guaranteed contributions from their employer to boost the value of their pension pots."

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