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Lib Dem minister proposes higher state pension to boost saving
Pensions minister Steve Webb has said the basic state pension needs to be increased from £97 to £135 a week as part of measures to encourage saving.
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Pensions minister Steve Webb has said the basic state pension needs to be increased from £97 to £135 a week as part of measures to encourage saving.
Webb told the Liberal Democrat conference in Liverpool that the government needed to change the state pension in order to make saving more attractive.
'For the first £35 you save, it is just replacing the means-tested benefits you would get anyway. It can't go on like that. Getting the state pension right has to be the foundation - we then need to make saving more attractive,' he said.
Webb argued the current state pension was not enough to live on, saying it should be raised from its current level of £97 to around £135 a week.
‘We’ve got to make people better off when they save, unambiguously better off, and that will never happen when we pay a state pension of £97 a week, and we think you need £135 to live on. So even we at the Department for Work and Pensions (DWP) don’t think £97 a week is enough to live on,' he said.
Webb said the government was committed to auto-enrolment. We've got a review of the fine detail of how we do it but the principle is there,' he said.
Webb also said allowing people to access their retirement savings early would make saving for a pension more attractive, as young people would not regard it as locking their money away.
‘If we want people to lock into a pension it might be more attractive if they know they can get at it if they need it,’ he said. ‘Intuitively that seems odd, I’m saying we need to save more but am talking about a method of taking money out of your pension scheme.’
Webb cited the example of the US where there is a higher take up of early access pensions than more traditional schemes, but said the government was not set to implement early access in the near future.
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4 comments so far. Why not have your say?
Grant
Sep 21, 2010 at 11:36
Sadly I don't think the average employee who may consider putting money into a pension each month really considers what means tested benefits he will forgo.
Pension saving must become compulsory for ALL earners - including self employed. Then, eventually the state pension could be means tested to provide a reasonable living wage for those who need it.
The current pension is spread so thin that wealthy pensioners see their state benefits as nothing more than a holiday fund, while many others who have no other income cannot survive on the benefits.
Compulsory pension saving throughout an average employees life, even on modest earnings, would provide a living wage.
Surely a reasonable step forward would be to cut the state pension for all those pensioners already earning £100k. I know we are some way towards doing this with age related allowances, but folk with £100k of income (Pensions, dividends, BTL investments) are hardly going to miss £5k state pension.
report thiseasy life
Sep 21, 2010 at 13:30
Grant said
Surely a reasonable step forward would be to cut the state pension for all those pensioners already earning £100k. I know we are some way towards doing this with age related allowances, but folk with £100k of income (Pensions, dividends, BTL investments) are hardly going to miss £5k state pension.
Yet again high earners are expected to pay in more and then get nothing in return. Its like being taxed twice!
report thishuudi
Sep 21, 2010 at 18:09
Sorry grant but people are more cute than you think. In my 65 yrs experience I can assure you that average joe knows his income tax to the penny, he knows about pensions,saving and means testing. To this end he will accumulate multiple houses, cars and anything of value rather than cash, because cash in the bank is the only thing that obstructs a claim for benefit.
In my experience it is middle management that are ignorant of these fundamental facts of life. Perhaps that is why the country is terminal decline.
report thisallan c
Sep 26, 2010 at 10:02
there missing the point .
.if you have invested and managed to save.. also worked very hard to creat a income even at 100k a year,.. working up to 70hrs a week also worked over 50 years some of us had to start work at 14/15y old,
the pension is something your entitaied to, WE WORKED FOR IT..
so someone saying you are ..not entitled to it ..because you earn over 100k per year wants to get of his/her backside and take the risks and work the hours we did,
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