Speaking at the TISA Retirement Saving Challenge conference yesterday, Waterson said the fact that nearly half of the UK’s population was subject to means-tested benefits was scuppering private pension saving. He said reducing means-testing and boosting the state pension would allow people to confidently build up their own savings while reducing the reliance on the state.
He said: “The key is to try to reduce means-testing. At the moment nearly half of people are subject to means-tested benefits and of course that has a huge impact on people’s saving habits. The Government tinkered with pension credit in the PBR but what they could have done was announce when they are going to restore the link between earnings and the state pensions because that in itself would help to reduce to some extent means-testing over time. Any Government has to look at ways of boosting the state pension when that opportunity arises. Of course finances make it tough but actually in the long run that is the best way to get people in the savings habit – giving them a decent backing to build their own savings in retirement, reducing reliance on the state.”
Chancellor Alistair Darling announced in Monday’s pre-Budget report that pension credit for pensioners on low incomes would increase from £124 to £130 and from £189 to £198 for couples.