The President of the Society of Pension Consultants has issued a warning saying that forcing people to make compulsory contributions to pensions is unworkable and may damage industry.
Our view
The pensions savings gap, i.e. the difference between what people should be saving and what they actually are saving is huge, and at over £30m and still growing the Government have a serious long term cash flow crisis.
If people do not save they may become a burden on the State in later years. If people are not wealthy enough they also pay less taxes again hitting Government revenue hard. We have always argued that compulsion in itself is no good. The only solution is educating the public about money and the need to save.
The one success so far is that the Government and the finance industry have educated well on pension scandals, mis-selling and company pension scheme closures. There is no straight answer with the exception of improvements to the tax incentive to save, better access to your pension fund, i.e. not having to wait 30 or 40 years before you can get at your money and only certain types of quality adviser being allowed to offer advice.
The crazy situation that we have at the moment is that a trainee, with just the equivalent of an ˜O" level in finance can offer advice on pensions , the biggest investment decision of you life, make a mistake and then leave the company that he/she is working for to do it all over again. If your adviser does not have G60, the specialist pension industry qualification, then do not trust his/her retirement advice.
The bottom line is you do have to save - but getting good advice is key.
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