UK - Government measures to resolve the pensions crisis will not include compulsion or abolishing contracting-out, work and pensions secretary Andrew Smith told delegates at the recent NAPF autumn conference.
He stressed that the industry needed to work with ministers to restore public confidence and dismissed claims from delegates that compulsion would help deliver security.
Smith said: “Suppose we had compulsion a few years ago. Employees would be knocking on our door saying ‘You compelled me to put money into a scheme and I’ve lost out’.”
And he added that setting minimum contribution levels for employers and employees could encourage people to regard it as the maximum they had to contribute, leaving many with insubstantial retirement savings.
Smith also rejected calls for abolishing contracting-out and insisted the industry needed to improve the way it was administered.
Unilever pensions manager Chris Lewin queried Smith on what the government would be doing to restore the loss of public confidence in pensions.
But Smith side-stepped the issue by saying the industry must “work together” with the government to make a change.
He said: “We’ve all got a responsibility here. For far too many people, pension planning is an incomprehensible maze.”
Delegates also expressed “disappointment” at Smith’s comments that pension reform would be built on the changes the government had already made and that the industry should give those changes a chance to bed in.
Thomas Eggar consultant David Herbert said the government should take the opportunity provided by the Pickering review to put matters right.
Smith added: “Pensions provision is a long-term commitment that demands stability for the long-term. Not short-term fixes that disrupt fairness and partnership between the generations.
“Not measures that will increase the tax burden for future generations and build back into the system the unfairness we inherited in 1997.”
This week's top stories included Cardano announcing plans to acquire Now Pensions from a Dutch pension fund later this year.
Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point