View more on these topics

PPI proposes solution to personal accounts means-testing dilemma

The Pensions Policy Institute has proposed a “pension income disregard” to overcome the means-testing problems many commentators believe to be the major barrier to the successful implementation of personal accounts.

The respected independent organisation has released a study examining the effect of the introduction of a pension income disregard, which would allow a single person a pension pot of £6000 before means tested benefits were affected.

The report, “Increasing the value of saving in Personal Accounts: rewarding modest amounts of pension saving”, calls for the first £12 per week of private pension income to be disregarded in any calculations of means tested benefits entitlements.

The PPI says the disregard would increase Government expenditure on means-tested benefits for pensioners by around 4 per cent in 2012.

B&CE, who commissioned the report, says although means tested benefits have lifted many of today’s pensioners out of poverty, the hurdle it creates in trying to encourage more people to save towards their retirement needs to be addressed.

The Conservatives and LibDems have warned the Government that unless issues with the interaction of means-testing are dealt with they are unlikely to back its plans for the scheme.

Pensions Policy Institute research director Chris Curry says previous PPI research has identified that some people may not benefit from their savings after the introduction of personal accounts.

He says: “While many people may benefit from the Government’s proposal to introduce Personal Accounts in 2012, some people, for example, those who rent in retirement and today’s older people with low earnings and no other savings, may not receive the full benefit of their saving as they may lose entitlement to means-tested benefits.

“This research shows that the introduction of a pension income disregard would improve returns from saving in a Personal Account for people who would otherwise be at risk of Personal Accounts being unsuitable.”

Recommended

How QE is distorting the gilt market

By Mike Riddell The moves in gilts in August were truly exceptional. Volatility in the gilt market (based off 10-year gilt futures) has soared to close to the highest levels seen this millennium, on a par with the eurozone debt crisis of 2011/12 and behind only the global financial crisis of 2008/09. The first distortion […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com