Minister wants auto-enrolment in work pensions
By The Bristol Post | Tuesday, July 10, 2012, 05:00
GOVERNMENT minister Steve Webb is calling for a new type of insurance to protect workers' pensions.
The Liberal Democrat MP for Thornbury and Yate said pensions should be insured against crashes in the stock market, which can decimate people's savings.
Mr Webb, the pensions minister, fears people will be put off from saving unless the government can guarantee their money is safe.
He believes there is a gap in the market for innovative pension products which might include some form of cost-efficient guarantee, enabling providers to offer people a greater degree of certainty on what their pension income could be.
Mr Webb said: "I am convinced people have a huge appetite for certainty about their pension savings and this demand will drive the shape of pension provision in the future."
Mr Webb is leading a drive towards "auto enrolment" which would see between nine and ten million people signed up for workplace pensions, beginning in October. But it has been suggested that between two and four million of those will then opt out of the scheme.
A study by the National Association of Pension Funds found that more than half of workers were not confident in pensions compared with other ways of saving.
Almost four in 10 of those eligible for auto-enrolment told the NAPF survey that they would struggle to pay into the scheme, while a third said they would quit the new pension.
"I want industry to innovate and think hard about this," said Mr Webb.
"With the dawn of automatic enrolment the market is growing, now is the time for the pensions industry to look at the market gap in relation to affordable guarantees and provide the products consumers are seeking."
The government is expected to launch a consultation on how to guarantee savings later this year.
Mr Webb added: "People really don't want to work for a year and get a pension statement showing their savings have gone down, not up."
Experts have warned the country is "sleepwalking into a pensions crisis", with a third of Britons aged over 50 having no private retirement savings.
The squeeze on household incomes during the recession has also put people off saving into a pension.
The Office for National Statistics said that just 48 per cent of employees were currently in a pension scheme, compared with 55 per cent saving into one in 1997.