News story

9th May 2002

Steve Webb Exposes Government Pension "Myths"

Delivering a keynote address to over 500 delegates at the annual conference of the National Association of Pension Funds in Brighton this morning, Steve Webb MP. Liberal Democrat Shadow Work and Pensions Secretary, exposed what he called four "myths" about the Government's pensions policies.

He told delegates that Government claims that they had encouraged saving were nonsense. By increasing the scope of means-testing, more people were now finding that saving for a pension was not worth the sacrifice and saving levels were at record lows.

Next he mocked claims that the Government had simplified the pension regime. He gave the example of state pensions where new schemes were being introduced and existing ones reformed and renamed on an almost annual basis. He described the proposed state pension credit as "eye-wateringly" complex, and expressed concerns that plans to change arrangements for pensions advice could lead more confusion among investors.

The third myth was that the Government was making progress on its goal of increasing the role of the private sector in providing pensions into the long-term. He pointed out that the move away from salary-related pension schemes had resulted in less money going into private pensions, and that stakeholder pensions had failed to take up the slack.

Finally, he attacked claims that the Government had taken effective action to deal with the pension problems faced by women. He highlighted the fact that the new State Second Pension - designed to help the low-paid and carers - would take decades to mature and that even then its value would be so low that recipients would need a further means-tested top-up to attain a decent standard of living.

Moving on to set out what the Government should be doing, Steve Webb argued that they needed to look seriously at ensuring that everyone on modest incomes or above had a private pension to top up their state pension entitlement. He said that the Government had come close to adopting compulsion and should revisit this issue.
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Finally, he proposed making it easier for people to work longer and to combine part-time work with receipt of a partial company pension, instead of the present "cliff-edge" which retirement represents for many people.

Commenting, Steve Webb said:

"The Government perpetuates a number of myths about its pensions strategy. The truth is that things are more complicated than ever, and that the target of boosting private saving is being missed spectacularly.

“Women in particular are continuing to be the poor relations when it comes to pensions. It is time that the Government admitted its pensions policy isn't working and took steps to make sure that more people are saving for longer. Without this, whole generations face a retirement in penury".

ENDS