What is being proposed is that workers receive a pension in line with their average life-time earnings. What is not being disclosed is that wage inflation will seriously erode that average. If compounded interest is a marvel for savers, it is a nightmare for pension beneficiaries.
Suppose wage inflation is 5% compounded over 40 years. A person starting on £30.000 p.a will receive £201,000 after 40 years with an average salary of £90,600.
If wage inflation is 8% compounded, that same person will receive £603,000 with an average salary of £194,300
In the 1st scenario, the pension will be 45% of leaving salary and in the second just 32%
Once again government is changing to policy that undermines the population through inflation.