The Department for Work and Pensions and MPs believe the pension system is sound despite widespread claims of a pension crisis.
Tory MPs were defeated on a pension crisis vote by the select committee which scrutinises the DWP. The committee's report, published this week, backs the DWP view that while the UK has problems with pension provision, there is no crisis, with UK pensions “basically sound”.
The report calls for Adair Turner's pensions commission to expand its terms of reference beyond the issue of compulsion to include the relationship between state and private provisions.
The cross-party MP committee called for an increase in the earnings limit for the pension credit, which comes into force in October. This would mean that low-income pensioners would lose less of their savings and income.
The report says the FSA should lose responsibility for the marketing and education of pensions, which should be taken over by the new pension regulator proposed in the DWP Green Paper.
The committee said it is disappointed that stakeholder pensions have not been more successful but it is not convinced there is evidence to support raising the 1 per cent charge cap and questioned whether the higher charges of some personal pensions could be justified.
Conservative MP Andrew Mitchell says: “We voted to say there was a crisis but Government MPs won the day. It is not good enough just to say that there is no crisis when large numbers of people face financial difficulty in retirement.”
Independent pensions consultant Ros Altmann says: “This report is a whitewash – it smacks of complacency and a lack of foresight. The people who will be in crisis are those who are not yet retired.”