The Government will have to reduce the reliance on means testing and refocus its attention on today's savers after the election if it is to make any headway in reducing the savings gap, warns ABI head of pensions and savings Joanne Segars.
The pension credit has done its job in helping many existing pensioners out of poverty but is acting as a disincentive to current sav-ers, says Segars. While supporting a revamping of the existing state pension sch-eme, Segars says the emp-loyer needs to be repositioned as the focal point of retirement provision if the Government is to achieve its goal of private pensions comprising 60 per cent of all retirement provision by 2015.
Segars says: “If you piece together what Tony Blair, Malcolm Wicks and Alan Johnson said at the Labour conference, the door is definitely not shut on a rethink on state pensions and that is something we would support.”
She says: “The pension credit is focused on today's poorest pensioners and has done a good job of that but, after the election, the incoming government, whichever party it is, needs to focus on today's savers.”
The ABI's recommendations for state pension reform include increased provision for those earning under £15,000 a year, red-uced reliance on means testing, the full inclusion of the self-employed and keeping the state pension age at 65 years in line with Government policy.
The ABI's latest quarterly pensions and savings index backs its call for means testing to be eradicated. It reveals that 50 per cent of respondents would either start saving or save more in their pension if the Government promised it would not reduce their entitlement to state benefits because of their private provision.
Segars says: “The fact that 50 per cent of people said they would save more in private pensions if the Government promised they would not reduce their state pension because of their private pension pro-vision sends a very clear message to the Government that means testing gets in the way of private pension saving.”
She says this is particularly pressing if the Government is to reduce the savings gap. ABI research last year revealed that about eight million workers are not saving anything for their retirement and Segars says this is likely to have inc-reased this year.
The index also revealed that 31 per cent would start saving or increase their saving if they could be offered a guaranteed return on their savings, even if this meant lower returns.
Despite making inroads into tackling poverty among pensioners, the pensions credit is still not being taken up by a lot of those most needing it as they feel there is a stigma attached to benefits in general. Segars says that although the application process has been streamlined since launch, it is still arduous and a deterrent to many.
The ABI is also looking at how employers can be encouraged to contribute to occupational schemes. Segars says the problem is most acute among small and medium-sized firms and the jury is still out on whether compulsion will be the best way to address this issue.
This will be a key theme of the ABI's savers summit on November 2. Representatives from the pro-compulsion TUC and their counterparts from the anticompulsion for employers CBI will engage in what is expected to be a lively deb-ate at the conference.
Chairman of the emp-loyer task force on pensions Sir Peter Davis, who is set to report his findings in December, will also attend.
Work and pensions secretary Alan Johnson will also be speaking, as will the shadow work and pensions secretary David Willets and Liberal Democrat work and pensions spokesman Steve Webb.
They will be joined by both Segars and ABI chairman Richard Harvey, pensions commission head Professor John Hills, New Zealand retirement commissioner Diana Crossan and Aegon director of corporate development Laurie Edmans.