UK - The government must bite the bullet on compulsory pensions' savings, delegates at the NAPF conference in Brighton were told today.
Liberal Democrat spokesman for Work and Pensions, Steve Webb MP, described EFRP chairman Alan Pickering's simplification review as a last hope, adding that the industry was doomed should the government fail to listen to recommendations.
Voluntary savings are not working, he told the assembly.
Many people who cannot afford to save, could do so if they budgeted from source.
Webb, MP for Northavon, pointed to the Australian model as an example of a compulsory system, with the onus on occupational schemes. In 1986, half of the average 6% wage rise in Australia was paid by employers into superannuation schemes. Mandatory employer contributions also grew from 3% in 1992 to 9% in 2002. Planned employee and state contributions of 3% were dropped.
The result, explained Webb, was a rise in coverage from 46% to 93% between 1984 and 1994 for full-time workers. Coverage among part-time employees was also up from 8% to 62% during the same period.
Webb also said that ministers were going in the wrong direction byencouraging defined contribution schemes, particularly in relation to women.
According to Webb, women are likely to receive reduced pensions from a DC scheme compared to a man in the same job. He also added that only 30% of stakeholder pensions were currently bought by women.
Commenting on women falling into the pensions poverty trap, Webb warned of the danger of history repeating itself.
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