UK - The UK should redesign its stakeholder pension to make it more like the US 401k plan, an influential MP for the ruling Labour Party has demanded.

Jim Cousins, a member of the House of Commons treasury select committee and chairman of the all-party occupational pensions group, said that the UK had adopted the US model, but without any of the savings incentives that make it attractive.

These, he said, included options to use savings for house purchases, hospital fees and further education.

“If stakeholder is going to survive it will have to have these features. What we must do is design them in with the pensions industry,” he warned.

Cousins was speaking at a conference entitled “Pensions in Crisis” in London today.

On the question of pensions compulsion, Cousins added that he thought improvement was better than obligation: “We need to redesign the pensions vehicle. It is better to improve the product than introduce compulsion.”

Dr Oonagh McDonald, director of the retirement income reform campaign, commented, however, that the success of 401k was based on a ‘better’ social security system in the US than in the UK.

Cousins also voiced concerns that government plans to introduce later this year a minimum income guarantee as well as pension credits for those in need of a boosted retirement income, would only succeed if few people actually took up the scheme: “It is only financially viable if a large number of people don’t claim them the_credits.”

“The proposals depend on take up being less than 100%. If take up is 100% this will become enormously expensive.”