The Association of British Insurers, the trade association for Britain’s insurance industry, has called on the government to take urgent steps ‘to avert a full-scale pension crisis’.
At a fringe meeting at the Labour Party Conference in Bournemouth, the ABI launched a ten-point Pensions Manifesto, ‘Better Pensions for All’ in which it scoped out ways to create a “simpler and fairer framework” for pension provision.
New polling research released by the ABI also reveals that only 15 per cent of the public trust the Government not to let them down on their pensions. The poll of more than 3500 conducted by YouGov for the ABI, is the first in a regular series looking at pensions in the UK.
It shows that a mere four per cent of people are very confident that they will have enough money to live comfortably when they retire; six out of ten are either not particularly or not at all confident.
Mary Francis, Director General of the ABI, told the meeting that pensions policy is now a top policy priority.
"We need a long-term strategy and more action now to start the process of reform,” she said. “We particularly want to see a big push to promote pensions via the workplace, and to help employers to do more."
The ABI’s manifesto comes as Standard Life, one of the UK’s largest pension providers, called for the abolition of means-tested pension benefits and the replacement of the existing state pension system with a single flat-rate pension for all.
Standard Life also described the government’s forthcoming pension credit - intended to reward less well-off pensioners for any savings they have put aside - as "a genuine disincentive to long-term saving." Critics have attacked the credit as so complicated that few elderly people are likely to apply for it.
"Low and middle-income earners who make modest private provision could find themselves little or no better off than if they relied entirely on the state" the insurer added.
Better pensions for all sets out ten steps the Government must take, in partnership with the pensions industry, employers and trade unions, to boost saving and pension provision:
- set clear and unambiguous targets to demonstrate how serious the Government is about reducing the number of people who are under-saving for retirement and establish an independent assessment of whether policies are working;
- reform state pensions to ensure that the system is sustainable in the long-term and sends a clear message to the public that it pays to save;
- put employers are the centre of pension provision by allowing them to promote the schemes they offer, encouraging them to offer financial advice in the workplace and giving them practical help to do so;
- increase employer contribution levels by providing the right incentives. Employer contributions are key to motivating saving and the Government needs to consider tax incentives to encourage more employers to put money aside for their employees;
- develop a national consumer information and awareness strategy to ensure the people know the importance of saving for retirement and the risks of not doing so;
- give consumers more choice on annuities so that they get full value for money for their pension saving;
- create a simpler and fairer framework. Government proposals in this area are welcome but a number of modifications are needed to make it work, not only now but in the future;
- ensure that the self employed are encouraged to save by putting them on an equal footing. They should be compelled to join the State Second Pension or take out some form of private pension equivalent;
- build confidence in occupational schemes by introducing the proposed Pension Protection Fund, but ensuring that it is properly funded from the outset with clarity about how and what level of benefits will be paid;
- deliver simpler pensions products with advice, ensuring that the products, sales process and charging structure are not only attractive to customers by economic for providers to offer.