The third and final report from the Pensions Commission has received a muted response from both the government and the insurance industry.
Aiming to address the issues raised by the Second report, the document reiterates the Commission’s belief auto-enrolment, employer contributions, state pension reform and the introduction of a National Pension Savings Scheme (NPSS) are the best ways forward for pension reform.
Responding to the publication of the third report, Stephen Timms, Minister for Pension Reform, says: "I want to thank the Pensions Commission for its hugely valuable work over the last three years. The Commission's ideas have formed the framework for the national debate on the future shape of the pensions system - one of the most important public policy issues we face.”
He adds it is essential to reach a broad consensus on the way forward, which is why the government has sought the views of the public, industry and other groups in recent months.
Timms points out: “Our goal is a lasting solution - not a quick fix - that delivers decent retirement incomes for tomorrow's pensioners, and we will set out our formal response to the Commission's proposals later this spring."
Meanwhile, Adrian Boulding, pensions strategy director at Legal & General, says it is a good thing the Commission has recognised the risks of levelling down, through the introduction of an NPSS - an issue which was very much underplayed in the previous report.
He adds: “The worry is the small contribution suggested for the NPSS could lead to a severe levelling down of pension provision. The main body of the report basically just reinforces the conclusions of the second report, except where you get to the levelling down, where Turner now recognises there are risks, and something should be done to minimise this.”
However Stewart Ritchie, director of pensions development at Scottish Equitable, says Turner’s suggestion of increasing communication to try and minimise the possibility of levelling down - designed to remind people it’s only a basic contribution and not enough for a comfortable retirement - begs the question how this will be done.
He points out: “How do you have these conversations if there is no advice in the workplace? One way or another, people in the workplace need to have their hand held and be encouraged in the right direction as an antidote to levelling down.”
And Simon Douglas, managing director of life & pensions marketing at Standard Life, says it agrees totally with Lord Turner's belief we need an overhaul of the state system, as we need to get as many people as possible onto a decent, basic state pension and reverse the creeping trend towards means-testing.
He adds: “Nobody with an ounce of sense is going to save for a pension if they end up losing state benefits. What is more, no-one would be comfortable recommending that they do so. We need to have a clear dividing line between state provision and private savings, and we continue to have doubts about proposals for a state-run national pension scheme."
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 Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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