Public support for a private sector savings scheme must be buttressed by protection for existing pensions, the Association of British Insurers (ABI) says.
New research from the ABI shows that nearly half of the working population would join a new pension scheme based on auto-enrolment and guaranteed employer contributions. But only 11% of existing savers say that they want to quit their existing pension scheme in order to join a new one.
The ABI’s Partnership Pensions will be a vital new rung on the savings ladder. But it won’t help anybody to simply spread existing savings more thinly. Government action to ensure existing saving is maintained must be part of its comprehensive reform plan, says Stephen Haddrill, director general of the ABI.
We must make sure that we do not just divert existing saving, particularly as a result of employers pulling out of their current schemes.
Previous research for the ABI showed that the public want financial services providers to run the new pensions system proposed by Lord Turner and the Pensions Commission, with nearly 60% agreeing that a new scheme should take advantage of the expertise and infrastructure of existing pension providers.
The ABI is also proposing a new economic regulator, the Retirement Income Commission, to oversee this part of the pensions market and to reassure the public that auto-enrolment represents good value for money for the saver.
The ABI will be presenting four new proposals to the Government at a conference on February 28. The proposals are intended to protect existing provision and ensure that any new scheme (the ABI’s Partnership Pensions or the Pension Commission’s NPSS) is genuinely additional to existing pension provision.