Pensions Q&A with Sir Steve Webb: “We urgently need to get people to step up”

Insight, Pensions

Piggy Bank

Pensions have come into sharp focus in recent years and ahead of our Pensions Conference on 19th July at IWM Duxford, our keynote speaker Sir Steve Webb has given us a little insight on the type of things he will be discussing at the event.

With all of the political turmoil we are currently in, what do you think this means for the Triple Lock and what do you now think we should do?

“When the Conservative manifesto was published it seemed likely that the triple lock would end. But with all other parties pledging to retain it, and with the Conservatives having no overall majority, there is a chance that this relatively generous indexation of the state pension will continue for a while yet.

“In our Royal London ‘manifesto for pensions’ we suggested that the policy be retained but only for existing pensioners who are generally on lower incomes than their newly-retired counterparts.”

If you had a magic wand what would be the one thing you would look to do in the pensions world?

“Ideally I’d have several magic wands!

“But probably my biggest concern is the number of workers on modest incomes who are simply not saving enough for their retirement even once automatic enrolment is fully implemented.

“We urgently need to get people to step up from the planned minimum contribution rate of 8% of earnings to a more realistic level, but we need to do so in a gradual way which doesn’t lead to mass opt-outs. I also think we could do with a period of stability when it comes to pension tax relief.”

Do you think that the state pension at some point will or should be means tested in the future?

“I certainly don’t think it should be means-tested. It is already a highly redistributive system with people contributing through their working life according to what they earn, with comprehensive credits for those who are carers or contributing in other ways, and it pays out a taxable flat rate at the end.

“To means-test it would penalise those who have made sacrifices in their working life in order to generate more income in retirement, and this sends exactly the wrong message to today’s savers.”

 

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