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6388.73 -30 0.47% 04:35

Webb hits back at 'paternalistic' pensions industry over mortgage plans

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Webb hits back at 'paternalistic' pensions industry over mortgage plans

Pensions minister Steve Webb has defended the Liberal Democrat proposal of allowing pension funds to pay for housing deposits and criticised the pensions industry for being 'paternalistic'.

Webb hit back at criticism of the plans, arguing there was a gap between what real people wanted from their pension and what the pensions industry expected.

'People in the pensions industry have a religious commitment to the word “pension” but people in the real world do not,’ he said.

'The rules allow people to take 25% as tax free cash. I didn't invent that but the government gives tax relief for something that is not used as pension. Some of the pension industry are incredibly paternalistic.'

Webb repeated his calls for pension schemes to offer greater guarantees to savers even if that meant lower returns. He said the pensions industry was also mistaken to criticise low risk investment strategies such as that used by the National Employment Savings Trust.

'I go to a lot of City conferences and hear pensions experts say they know what's best for members, put them in a high risk fund when they are young.

'Sorry that's not the way I view pensions. We have to recognise that we live in economically uncertain times, if people see all the value of their savings has dropped away, what will that do to their feelings about pensions?

'They will never save to the age of 75 because they will have already given up 30 years ago.'

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