I’ve waited a very long time to hear a Government minister publicly say they must make sure it pays to save. To be honest I’d nearly given upon ever hearing it but it’s finally happened. It’s a massive statement of intent – the sort of thing you need to read a couple of times to make sure you got it right and to let sink in. Anyway, I’m pretty much blown away.
My view has always been that it should pay to save and over the years I have dedicated quite a lot of time and effort into asking the people with the power for a simple guarantee to those about to be auto-enrolled that every pound saved in a pension should make savers at least a pound better-off than non-savers.
Quite simply, if it doesn’t then the auto-enrolment reforms are sure to fail as we cannot have people saving all their lives only to get to retirement and realise they would have been better off not to have bothered. That cannot be right. When people save for a pension they are doing the right thing by themselves and by the rest of us. They deserve a pension system that does right by them.
Joe and Josephine Average, I would guess, would be amazed to think that every pound they save in a pension doesn’t always make them a pound better off than their non-saving next door neighbours if they are among the millions set to receive means-tested support when they are old. The new pension reforms must not let them down and from what Steve Webb has said they just might not.
Steve Bee is managing pensions partner at Paradigm