A ‘BritSaver' learning the lessons from the KiwiSaver in New Zealand could be a more appealing and less risky proposal than the National Pensions Savings Scheme (NPSS), according to the Pensions Policy Institute (PPI).
The PPI’s report – NPSS policy and design choices – also concludes that inadequate state pension reform would threaten the success of the NPSS.
The only other country to be planning for a national auto-enrolment scheme is New Zealand, which has a high universal state pension and only around 5% of pensioners means-tested for their basic income.
Alison O’Connell, director of the PPI, says: “That raises alarm bells for the NPSS in the UK as, even after the Pensions Commission’s proposals have worked through, eligibility for Pension Credit would remain at around 45% of pensioners.”
She believes this adds to the need for the government to consider bolder state pension reform which would reduce the scope of means-testing from its current level, not just contain its future growth.
Other feasible models of state pension reform in the UK could reduce eligibility for Pension Credit to around 10%, which O’Connell says would help take the pressure off the NPSS.
She adds: “KiwiSaver has some product design and implementation features that may be welcomed here for a more flexible ‘BritSaver’ than the NPSS. For example, annuitisation is not compulsory in KiwiSaver. It comes with support for buying a first home and a package of help for making financial decisions. It is promoted in language about helping people to build up discretionary savings, not about ‘we all have to save for a pension’.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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