At a pension debate hosted by Pointon York last week, Reynolds Porter Chamberlain partner Jonathan Davies said the Department for Work and Pensions’ forecast shows there will be no reduction in people on state benefits after the introduction of personal accounts.
A draft DWP paper was placed on the website in error and says after reform of state and private pension systems, around 25 per cent of pensioner households could be entitled to pension credit in 2050 compared with 30 per cent after reform of state pensions only.
But the paper notes that much of this difference is due to rounding and the proportion of households entitled to pension credit in 2050 falls by only a marginal amount after the reforms. The DWP says the quality-assured paper will be published next week but it does not dispute the draft figures.
Davies says: “Personal accounts are not reducing the proportion of households entitled to state benefits. Presumably, the people the DWP is now projecting will take personal accounts are a slightly more wealthy population than those who are on pension credit.”
Geoffrey Pointon, chairman of Pointon York Group, says: “Even if the scheme goes beautifully, the material effect will be next to nothing in terms of people providing for themselves in retirement. The opposition should be fighting this dud policy.”
A DWP spokesman says the combined state and private sector reforms are projected to result in 40 per cent of households being entitled to income-related benefits, down from 75 per cent if no reform took place.