I met Lord McFall and his colleagues on the Workplace Retirement Income Commission in Glasgow today. The Workplace Retirement Income Commission (WRIC) is the independent review of retirement saving. The Commission is seeking to find better ways to provide retirement income for the millions of working people who depend on workplace saving for security and dignity in retirement. They have produced a very good background paper on workplace retirement saving as part of their call for evidence.
Not surprisingly, I emphasised the undermining of public service pensions by the UK Government and in particular the 50% increase in contributions that is likely to drive many low paid workers out of their pension schemes. But low income is not the only barrier to getting people to save.
Savers need to have confidence in the long term benefit of schemes and in this regard the switch from RPI to CPI has seriously dented confidence. UK private pensions are notoriously poor value for money with Dutch schemes delivering almost twice the benefits. Confidence in the financial institutions is rightly at an all time low.
A new approach is needed to simplify the pensions system with easy to understand products where the benefits are not eaten away by management fees. I cautioned against less regulation and in favour of a more prescriptive approach that starts to build retirement income at an early age.
The Commission is planning to publish an interim report in June.