The company, the UK’s biggest not-for-profit provider of pensions to people on mid to lower incomes, is urging the Government to embrace the proposals.
The plans include raising the trivial commutation limit from 15,000 and boosting the pension credit capital disregard – the amount ignored when calculating a pensioner’s entitlement to means-tested benefits – including the pension credit – which is currently 6,000.
Research conducted by TNS for B&CE this year shows that 58 per cent of people believe the pension credit is a means-tested benefit that penalises people who save towards their retirement.
It its report on personal accounts, the DWP select committee said: “The evidence that we have received points to a widespread interest in increasing the trivial commutation and pension capital limits.
“These changes have the potential of making it pay to save, even for those who save only a little in personal accounts and who claim means-tested benefits in retirement.”
B&CE deputy chief executive John Jory says: “If the Government is serious about encouraging those on modest earnings to save for their retirement, it must address the huge disincentive created by the pension credit.
“Means-tested benefits are very important in helping to reduce pensioner poverty but it makes no sense if they also trap millions of people into accepting that these minimum hand-outs from the state are all they can look forward to in retirement.
“A simple increase to the amount that people can save without fearing they are wasting their money will solve this problem in a stroke, without in any way damaging the safety net that is there for those who cannot afford to save.”