Our head of pensions and savings considers calls for urgent reform of state and workplace pension systems to improve retirement outcomes.
In a parliamentary inquiry by the Work and Pensions Committee: ‘Protecting pension savers – 5 years on from the pension freedoms’ this morning (8 June), Baroness Drake CBE, Baroness Ros Altmann, CBE and Sir Steve Webb, who described the current pension situation for those not yet retired as “a slow motion car crash”, gave evidence.
Their recommendations included measures to improve outcomes for workers and in particular women, low earners and the self-employed and gig economy workers.
Some of the suggestions included:
- Backdate claims for National Insurance credits for women not working to look after children beyond the current limit of three months
- Improve legislation on pension sharing in divorce
- Reform of the way tax relief works to make it more understandable and appealing
- Reinstatement of the right of carers to build up additional state pension
- Boost social care provision to take the burden of care off women
- Equalise employment benefits for men and women to boost women’s earnings, and their pensions too
- Increase employer contributions from the current minimum of 3% to 5%
Becky O’Connor, Head of Pensions and Savings, interactive investor, an investment platform that offers pensions, said: “Solutions to the growing problem of people facing hardship in retirement are staring the government in the face.
“Reform of both the state pension and workplace pension systems is urgent. Women, low earners and the self-employed in particular, are at high risk of retiring without enough income, as the pension system moves from defined benefit to defined contribution and a growing number of people retire with smaller pots as a result.
“The truth is many do not even realise the difficulty that awaits them in retirement because of a chronic lack of engagement with retirement planning - until it is too late.”
Notes to editors
A recording of the inquiry is available here
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