In the political game of suggestion and counter suggestion for solving the savings and pensions crisis, Tory Shadow Secretary for Work & Pensions, David Willets, has suggested that the Tories would redirect an additional £11bn in incentives for contracting out of the State Second Pension (S2P).
What is contracting out? Visit the State Pensions Centre in the Pensions Adviser.com.
Registered users: Get your free fact sheet on S2P and contracting out.
Our View
On the back of the tories proposing to link the Basic State Pension to earnings inflation rather than price inflation and also suggesting that they may consider additional tax incentives such as doubling what you put in to a pension up to certain level, this comes as no surprise.
As ever, we have seen nothing to substantiate how this would be funded. We have maintained that just offering "carrots" or incentives to save such as tax relief works well for some but the majority of people still do not save enough.
Only education and some from of "stick" i.e. compulsion will solve the savings crisis.