Business leaders invited to play a major part in reforms proposed in forthcoming green paper
The Government has invited business leaders to form a pensions taskforce to build on the most successful employer schemes and boost opportunities for employees to save.
Work and Pensions Secretary Andrew Smith made the invitation at a pensions conference hosted by the Confederation of British Industry.
His proposal to involve key organisations in developing the future of pensions would play a major part in the reforms proposed in the forthcoming Green Paper, he said.
The Secretary of State told the conference the Green Paper will look at how the Government could continue to encourage the spirit of partnership in pensions and cut the red tape and costs associated with running schemes.
'Current legislation is often overly prescriptive and, in some cases, difficult to follow,' he said: 'There is a good case for adopting a more risk-based approach to regulation; developing the role of the regulator so it is able to offer advice to pension schemes as well as police the regulatory framework.
'What matters is how much goes into the overall pension pot, regardless of whether someone's in a defined benefit or defined contribution scheme. The bottom line is people are not saving enough for their pensions. We must all do more to help them,' he said.
Smith also urged companies with occupational schemes to speak up about the good deals they offer their employees.
'It is encouraging that there is a growing emphasis on the value of the complete package employers offer their employees,' he added.
'Many companies are beginning to introduce total benefit statements setting out their overall packages to staff. We need to share good practices, let people know where companies are doing good things and where employers are encouraging their staff to take up pensions.'
But, Smith said, while most employers take their responsibility for pension provision seriously, there has been a trend of schemes closing for many years.
'Too often this has been a cover for cutting contributions,' said Smith. 'This fundamentally undermines the pension partnership.
'Not every firm has provided pensions in the past but the focus many commentators put on the benefits of company schemes has raised public expectations of employers. Experience shows saving in the workplace is effective. People expect it to continue, a responsibility we share.
'The goal of security in retirement for all will only be achieved by a partnership between Government, employers and individuals.'
Smith called for a new dialogue between employers and employees over pension provision. 'We should all be concerned when schemes close and contributions are cut with little or no dialogue with employees themselves,' he said. 'This secrecy undermines confidence in the pension promise and ultimately damages loyalty to the company.'
The Society of Pension Consultants has said pensions must always receive the most favourable tax treatment of any form of saving and, if pensions are to survive, withdrawals must not suffer more tax than when the money was saved.
The comments were part of a Budget submission to the Government urging it to restore confidence in the pensions savings regime.
The society noted there has been speculation that consideration is being given to the withdrawal or restriction of the tax-free lump sum. This, it said, is the key feature of the pension taxation regime and removal would make pensions more akin to short to medium-term saving, from a tax point of view.
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