UK - Theresa May MP, the shadow secretary of state for work and pensions, has stated the current UK government's failure to address the impact of means-testing on the 2012 pension reforms will be one of the issues it will include in a review of the personal accounts project should the Conservative Party win the next general election.
At an anniversary address for the think tank Politeia, May claimed in her lecture on 'Providing for Pensions - Principles and Practice for Future Success' that there needs to be separation in people's minds between auto-enrolment and personal accounts in order to "find the right way forward".
She noted the opposition party had "long supported and proposed" the idea of auto-enrolment but has concerns about a 'big bang' approach. Instead, the Tory Party is calling for the government to consider suggestions allowing employers to implement it on a voluntary basis before 2012.
She meanwhile reiterated that while the Conservative Party supported the "principle" of personal accounts, there are "clear concerns about the way things are shaping up". This includes the potential for employers to "level down" contributions, concerns over administration costs and the government's ability to deliver the system.
In particular, she highlighted the recent draft enrolment regulations, which detail the phasing in approach, as a potential problem. "Clearly there needs to be a degree of phasing in, but no-one expected there to be a 1% employer contribution as late as 2015." (See earlier IPE article: UK: DB schemes given 3-yr auto-enrolment deferment)
May warned this could "undermine" the whole principle of the system and said while the number of savers might increase, this could be at the expense of contribution levels.
She told attendees: "There is a clear need to review the personal accounts project and a Conservative government would do just that."
In response to questions relating to pensions means-testing, May claimed this is "one of the barriers around personal accounts". She added: "I don't think the government has addressed this issue. It is one of the issues and concerns we would need to look at in a review of personal accounts."
May also reiterated plans to bring forward an increase in retirement age, in order to fund the restoration of the earnings link to the basic state pension, and highlighted plans to focus on the development of hybrid pension schemes and risk-sharing. (See earlier IPE article: UK Conservatives plan to speed up pension age increase)
She said: "Although it may be impossible to save DB schemes as we know it, we should look at alternative options, look at ways of salvaging some DB provision. We intend to look seriously at hybrid solutions."
This is in addition to considering pieces of regulation which would allow more flexibility for employers in the design of pension schemes, such as risk-sharing, and further analysis on the use of other models deployed overseas.
"We are looking at some of the early access models in countries such as New Zealand and the US, and other models, and it's clear it needs further examination. Allowing some early access could allow people to overcome their fears and encourage saving."
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