Yesterday the DWP confirmed it would be delaying the full introduction of auto-enrolment and personal accounts until 2016 to give more time for employers and pensions administrators to sort out their systems.
Altmann says radical reform of the state pension should be the first priority and calls for an end to mass means-testing of pensioners. She says even with all the reforms just enacted, nearly half of pensioners in future will be on means-testing which makes private pension saving unsuitable.
In her view, ISAs may be a better product for many, especially those who are young, with large debts or who have not yet bought their own home.
Altmann says: “The Government has announced that its major reform of private pension savings will be delayed until beyond the next Parliament. This gives an ideal excuse to rethink the whole scheme, before even more time and money are wasted on personal accounts that, as currently designed, will actually damage private pensions for millions of workers, not improve them.
“This whole policy should be put on hold, while a proper re-assessment is conducted. A nationally organised, low cost private pension scheme does have theoretical attractions. But in the current environment, it is not suitable. It also puts the Government at risk of being held responsible in future for people wasting their savings.
“Instead of delaying the implementation beyond the next Parliament, far better to address the problems that are already obvious in its design, before even more time and money are wasted on a policy that has the potential to make pension provision worse, rather than better in future.”
Liberal Democrat shadow work and pensions secretary Steve Webb says: “Labour’s flagship pension scheme for people on low pay is unravelling before our eyes.
“It will be six wasted years before the full rate of contributions is in place, which means that many pensioners who already face a retirement in poverty will suffer unnecessarily.
“Even when the scheme is properly running, the basic level of contributions will only buy a very modest pension. Delaying the start of the scheme means even more people heading for a means-tested retirement.”