Conservative MP Harriett Baldwin has delivered a stark warning to the Government that unless it ends means tested state pensions, auto-enrolment could become the “biggest misselling scandal in history”.
Speaking at a Social Market Foundation fringe event on pensions at the Conservative conference in Birmingham yesterday, Baldwin, who is parliamentary private secretary to employment minister Mark Hoban, said state pensions refrom must be a priority.
Last month, there were reportsprime minister David Cameron had called for a rethink of reforms to create a weekly £140 single-tier state pension because of concerns over those who may miss out.
In his speech to conference this week, work and pensions secretary Iain Duncan Smith insisted the reforms will go ahead.
Former work and pensions select committee member Baldwin said: “We have to get rid of the means tested state pension. This will be the biggest misselling scandal in history with auto-enrolment unless we immediately get rid of the means test.
“Currently the state pension can be topped up if you don’t have any pension savings. We need to make sure we have the simplification of the basic state pension, which has been imminent in terms of draft legislation for some months now.
“We need it in order to ensure that future generations know that every additional pound they save goes into their pension through auto-enrolment or any other vehicle that is going to give them an incremental income in retirement.
“We are halfway through a really radical set of reforms that will leave the pension market in a better place than it has been for some time to come but still with lots of things to achieve.”
Baldwin also came out strongly against a pension charges cap saying competition is the best way to drive down fees.
She said: “Nest has had a remarkable impact in that it has brought down fees in a way that pension fund caps have not brought down fees.
“I think that by capping pension fees you would set a level that everyone in the industry migrates towards. We learnt that with the stakeholder pension so we need to move on from it and need competition.”