UK – Lord Turner’s proposed National Pensions Savings is still the one to beat, according to pensions minister John Hutton.
The NPSS was one of the key ideas of Turner’s Pensions Commission, although it has faced widespread industry criticism.
According to Hutton, “The idea of a stronger state pension funded by some increase in the state pension age and acting as a platform on which to build a radical expansion in personal saving through access to new and low cost savings options is absolutely the right basis for the pensions debate.”
Other organisations that have thus far submitted pension proposals include the National Association of Pension Funds, the Investment Management Association, the Pensions Reform Group and the Association of British Insurers.
A spokesperson for the Department for Work and Pensions (DWP) told IPE: “We are obviously looking at people’s responses and views with interest.” A government white paper is due in the spring.
Hutton gave his keynote address in London today on ‘The State and the Individual – building a lasting pensions settlement’ at an event hosted by the Institute for Public Policy Research.
“The relationship between the state and the individual lies at the heart of the pensions debate,” said Hutton.
He added that a new deal must be struck between State and the individual in order to meet the challenges of demographic change, and to assist the reported ten million people who aren’t saving enough for retirement.
This “new deal” must rest on the pillars of fairness, affordability, simplicity, sustainability and personal responsibility to build sufficient retirement savings.
According to Hutton, individuals need to step up to the challenge of shouldering greater responsibility for their retirement savings.
He admitted: “We are not doing as well as we should be doing” regarding encouraging people to save. “We need to move from a low to a high savings culture.”
Hutton explained that the state must act as provider and enabler: providing the right framework to support an increase in private saving and enabling a rapid expansion of personal savings. It should also give the individual confidence to save.
NAPF chief executive Christine Farnish – also at the event – called the national pensions debate a “crucial” time to bring lasting reform to the UK’s “poor and inadequate” pension system.
According to Farnish, in order to build a lasting pensions settlement, one must answer two questions: how to allocate risk and responsibility between the various parties involved in the “shiny new pension system”; and what mechanisms should be in place to ensure the system will last and the goalposts won’t change.
Farnish also stated that an enduring pension system would need a fairer, more transparent basic state pension to act as a building block for pension reform.