With people living much longer in retirement and an apparent decline in the number of people saving, retirement incomes could be significantly lower in 20 years time. Indeed, the Pensions Commission estimates that nearly 10 million people are not saving enough for their retirement.
To address these issues, the Pensions Commission put forward a blueprint for reform that essentially comprises four bold ideas:
The government has welcomed these recommendations as the right framework to debate long-term pensions reform. At this stage we’re ruling nothing in and nothing out. However, it’s clear a solution can only be reached through a partnership between individuals, employers and government.
The role of employers in encouraging workplace saving will continue to be vital. It is the responsibility of government to ensure a minimum income under which no-one is allowed to fall and to provide the right platform and incentives to encourage private savings, while individuals must take greater responsibility in planning for their own retirements.
So achieving a nationwide consensus is vital. That’s why my Ministerial colleagues and I have been travelling the country as part of the National Pensions Debate.
In February, the pensions industry responded to our challenge by coming up with alternatives to Lord Turner’s National Pension Savings Scheme that could deliver a simple, portable and flexible product that will enable people to save at low cost. We are assessing their proposals at the moment.
In March we held National Pensions Day, the largest consultation event of its kind, which saw over 1,000 people of all ages and from all walks of life come together in six locations across the country to consider and debate the choices we must make.
The results of these consultation exercises will help inform the proposals in our forthcoming White Paper. These proposals for reforms will have been put through five key tests. They will be tested to ensure that reforms are fair, affordable, simple, sustainable and promote personal responsibility.
To reach that point we have to work together. If we succeed in our goals then all of us will share in the prize – an enduring pensions settlement that lasts for genertions to come.
This article was written by Stephen Timms when he was Minister for Pensions Reform.
The supplement was delivered with the June 2005 issue of The Treasurer magazine and was sponsored by KPMG (Lead Sponsor), Insight and PricewaterhouseCoopers (co-sponsors).
