Currently the auto-enrolment age for personal accounts is state retirement age. However, Aegon are urging the government to lower it to age 50, as there is growing concern about the potential effect of personal accounts on mean-tested benefit. Experts believe that people will not be encouraged to save if personal accounts are mean-tested and could reduce the amount of benefit that they are able to claim.
Rachel Vehey, head of pensions development for Aegon said that it was very difficult to work out who would and would not be better of by saving in a personal account. She said, ‘Auto-enrolment is a key part in making the pension reform work and it is not an argument the government can afford to lose.’ Aegon are encouraging older workers to seek individual advice to find the best method for them to save.
The consultation of personal accounts ended on 20 March.
Our view
Flexibility is key and incentives to pay into trusted investment funds are key. This Government could have had every person in this country ‘saving for England’, if they had retained residential property as an acceptable property investment. All they would have had to do was lower tax concessions so that it could be afforded. In the end, they ‘bottled’ it and we are ‘back to square one’ with a compulsory pension fund on the way that people will still not understand when it starts in a few years.