Tories argue pensions is a political matter

Pension experts have called for politicians to leave matters concerning pensions by the formation of a permanent ‘Pension Committee” instead.

Speaking at a City Forum roundtable event last week, a mock jury questioned the need for politicians to meddle into pensions, with Andrew Hilton, director at the Centre for the Study of Financial Innovation adding: “It’s a case of people who talk about instead of people who know about.”

In response, shadow secretary of State for Work and Pensions David Willetts MP replied politicians were democratically elected representatives charged with that responsibility.

Outlining a Conservative approach towards pensions going forward, Willetts proposes a system which reverses past Tory policy and increases state earnings in line with earnings, rather than age, in a bid to formulate a state system which brings pensioners up to means-tested welfare pension credit level by 2008.

He also criticises the current saving ethic calling the idea to expect individuals to save from the age of twenty as ‘irrational’, as people within this age bracket have various education-related debts to pay off as well as trying to save to get onto the property ladder.

Willetts proposes a possible solution of encouraging more ‘flexible’ savings products, enabling people to save while also being able to take money out of their pensions at an earlier date.

Joanne Segars, head of pensions at the Association of British Insurers, says the problem with people dipping into their pensions is when the time comes to retire, there is no more money left in the pot, leaving people with no choice but to start over again as one can't go back in time.

Segar adds although the idea of offering more flexible products sounds attractive, it only creates further problems.

Willetts retorted: “The device in the car enables you to go faster is the brake.” He suggested by letting people dip back into their pensions pots, it would enable them to grow their pension through other investment means.