A group calling for pension reform today put forward a series of proposals to the Government which they claim would end pensioners' poverty.

The Pension Reform Group, which is headed by MP Frank Field and includes politicians, economists and academics, wants to see the current state pension boosted to give everyone an annual income of around 28 per cent of average earnings - around £7,000 in today's money.

The new scheme, which it calls the Universal Protected Pension, would be compulsory for everybody to join when they reached 25, and would operate in a similar way to a company pension scheme.

It would be funded through increasing national insurance contributions by around 5 per cent, and administrated by an independent board of trustees paying the same to everybody, regardless of contributions, and would bring an end to means-testing.

State merger

The group added that it would be introduced over 40 years and eventually merged with the existing state pension scheme.

The proposal was welcomed by Liberal Democrat leader Charles Kennedy, who said his party was concerned about the Government's increasing reliance on means testing.

David Willetts, Shadow Secretary of State for Work and Pensions, said the report was valuable, but added that he was concerned about the power that would be given to the quango which would control the fund, and further increases in National Insurance.

But Alistair Darling, Secretary of State for the Department for Work and Pensions, dismissed the report.

He said: "There is nothing new in these proposals, and they involve significant tax increases.

"The Government's pension policy is workable, affordable and helps all pensioners."

Britain's biggest pensioners' organisation, the National Pensioners Convention, criticised the proposals for not helping pensioners today.

Joe Harris, NPC general secretary said: "Private, stakeholder and occupational pension schemes do not provide the kind of financial security and certainty that is needed in retirement."