UK - David Blunkett, the new secretary of state for work and pensions, has challenged the nation to take responsibility for their own savings as the government works towards solving the pensions crisis.
Speaking in the House of Commons, Blunkett said: “It is a challenge for the nation, not just for political parties. It is a challenge for individuals to build in retirement an income that will sustain and support them with dignity and comfort; a challenge to business to ensure that it is prepared to join us in making that contribution; and a challenge to all of us to determine who pays, how they pay, at what point they are entitled, and what that entitlement will bring.
“Until we face the challenge of people living longer and wanting to work less and retire earlier, and people believing that they will enter the labour market at a later age, we will be in a fool’s paradise.”
Adair Turner, who is due to come out with his final report on the UK pensions industry in October, has said in the past that people lived in a “fool’s paradise” - that reliance on the equity markets from the 1980s meant that they misled themselves about the sustainability of pensions in failing to account for longevity.
Blunkett added: “The fact is that people were not prepared to face up to the challenge of the future, and we are. We are prepared to offer a consensus to the Opposition parties, because people will not forgive any politician who does not look 30, 40 and 50 years ahead and come up with solutions for the future.”
Commenting on Blunkett’s challenge, Ray Young, CEO at 3Q Solutions, said: “Blunkett has delivered the pension crisis into the nation’s lap, making it clear that citizens need to take control of their own financial destiny.
“But if people are going to be inspired to make the necessary pension provisions, the first step needs to be better education. The problem at the moment is that the pension and investment advice provided to the public is often complex and archaic. We believe that the financial industry should do more to empower individuals to manage their finances, both now and in the future. They also need to provide more clear information about pension provision, the options open and the real risks involved.”
Young also called on the government to provide tax cuts as savings incentives and to learn from Ireland, which introduced Special Saving Incentive Accounts that are now being used by many as a vehicle for retirement savings.
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