View more on these topics

Webb at the forefront of a revolution

After years of watching our pension system falling apart, it seems that pensions minister Steve Webb may finally be getting to grips with the inadequacies of the UK state pension. If the reports are accurate, a pension revolution is about to occur.

For years, government has tinkered with our current inadequate state pension system, adding to its complexity while failing to address the fundamental problems associated with mass means-testing of pensioners. As the OECD recen-tly pointed out, the UK has just about the lowest state pension in the developed world – and it is by far the most complex. Most people have no idea what state pension they will be entitled to.

The fundamental problem is that our state pension system undermines private pension saving. If around half of pensioners end up entitled to means-tested benefits, their private pensions will be penalised and some may see their whole private pension effectively taken away.

As we are about to launch a national system of auto-enrolment and a new national pension scheme (Nest) specifically targeted at low to moderate earners, we would be at risk of putting these workers into a pension which would ultimately be partly or totally removed from them by the means test.

It is those low to moderate earners who are most likely to lose out and they will be unable to save enough to float themselves off means testing.

Therefore, in order to alleviate some of the problems of auto-enrolment and the official Nest system, it is important that the Government sorts this out. At last, it seems it is intending to do just that.

The idea is to introduce a flat-rate state pension which combines the basic and second state pensions into one payment of £140 a week. This is above the pension credit level of just over £132 a week and well above the full basic state pension of just over £97 a week.

Everyone would automatically get this higher pension, so most women would receive a much better state pension without having to claim pension credit and without penalty to their private savings. I assume there will be some transitional protection for anyone whose state pension would have been above that level.

Imagine it – one decent, flat-rate state pension that everyone could understand. This would be the best news for pensions in years.

Dr Ros Altmann is director general at Saga


FSA to monitor platform conflicts of interest

The FSA is scrutinising how firms manage conflict of interest issues where advisers own a stake in the platform they use. The regulator raised the need for firms to disclose potential conflict of interests after it fined Moneywise IFA £19,600 for investment advice failings in September. The final notice issued to Moneywise IFA noted the […]

Word to the wise

The latest advertising campaign from Northern Rock aimed at intermediaries says “We listen to you” and “No dual-pricing”. This followed the campaign from Platform in September 2009, which gave seven pledges, including no dual-pricing and a commitment to listening to IFAs. This at a time when Coventry Building Society was awarded best overall lender at […]

Boosting our annuity strategies

Targeting annuity purchase in lifestyle strategies isn’t anything new but we’ve just lifted the bonnet and injected an enhancement shot into the end-point of these solutions. The recent volatility has shot short-term volatility into equity markets and painted a very turbulent backdrop but we’re also equally faced with a stressed fixed interest environment. This can […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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