Pensions Need an Image Makeover

by Dr. Ros Altmann

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In response to the report out today showing that people seem to be losing faith in UK pensions, and the fact that savings in ISAs last year were twice the sum saved into pensions, Dr Ros Altmann, Director General, Saga said: “There seems to be a crisis of confidence in our pension system. People are no longer willing to just put their hard-earned money into a ‘locked box’ where that money is taken away from them and they cannot access it for a potentially very long time. If Government wants to ensure people save for later life, auto enrolment needs to focus on encouraging long term savings in general, rather than just pensions in particular.

“Ideally, auto-enrolment should encompass either pensions or ISAs, which could allow workers to access their own contribution if they need to, while leaving the employers money and tax relief locked in for the long term.

“Pensions need an image makeover, after suffering a succession of scandals and many of those approaching retirement have been disappointed. This is partly due to the economic crisis, and then compounded by the Bank of England’s QE policy which has undermined both company pensions and annuities. “It’s time for some new thinking on pensions. The simplicity and flexibility of ISAs have proved far more popular with today’s savers. If auto-enrolment is to achieve its aims, we will have to ensure people can access their own money if they really need it. At the moment, when it comes to encouraging long-term saving, policy says its pensions or nothing, which will unfortunately leave too many people with nothing!”