Labour’s scepticism over the Budget pension reforms has been laid bare after a survey revealed almost two-thirds of the party’s MPs do not feel confident savers can manage their own money post-April.
The new pension freedoms will hand people greater flexibility over how they spend their pension pot from age 55.
However, experts have warned the reforms also carry risks as more savers choose to remain invested in the stock market rather than buy an annuity.
People will also be able to draw their entire fund in one go if they choose to, although withdrawals will be taxed at the saver’s marginal rate. Previously, capped drawdown income payments were restricted to 120 per cent of the GAD annuity rate.
Money Marketing has previously reported growing anxiety among senior Labour figures about the risks associated with the changes.
And a survey of 50 Labour MPs conducted by Now: Pensions reveals 64 per cent do not feel confident about peoples’ ability to manage their income sustainably through retirement, compared to just 6 per cent of the 41 Conservative MPs polled.
One in six of the 100 MPs surveyed believe the state pension will not exist in 30 years, while 46 per cent are confident the state safety net will be retained.
Elsewhere, some 61 per cent of MPs believe auto-enrolment minimum contributions should be increased, while 51 per cent are not confident the Budget guidance guarantee will be in place in April 2015.
Now: Pensions chief executive Morten Nilsson says: “In the corridors of power there is a worrying degree of scepticism that the state pension can be maintained over the long term.
“With the future of state provision so uncertain, it’s never been more important for young savers to take control of their own pension saving and put aside as much as they can to help protect themselves against an uncertain future.
“Auto-enrolment has a key role to play in plugging the savings gap but MPs agree that contributions need to rise beyond current levels to give Generation Y any chance of an adequate retirement.”