It’s time to take politics out of pensions

We can no longer trust politicians to take care of our pensions, say experts. Instead, they should hand control to an independent body…

Prime Minister David Cameron and Deputy Prime Minister Nick Clegg wave on the steps of 10 Downing Street

Out with the old: Pensions and politics don't mix well, say experts

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After years of political meddling, Britain’s once-proud pensions system lays in ruins.

Criticised for being over-complicated and unrewarding, pensions have been rejected by millions of Britons, despite huge swathes of us facing terrifying gaps in our retirement savings.

Fewer than 40% of the working-age population has any pension whatsoever, thanks in no small part to an overly complex system that’s constantly changing.

Now, as the coalition government battles to cut the UK’s bulging deficit, pensions face the threat of the Chancellor’s axe once again.

Already, we know the state retirement age is to rise with sharp and immediate effect, forcing millions of us to work into past our 70th birthday.

Meanwhile, public sector workers have braced themselves for dramatic cuts to their ‘unsustainable’ old age benefits.

And as if that wasn’t enough, the new Government has now knocked a potential £100bn off the value of private final salary pensions in its first ‘stealth cut’.

How can we plan for the future if every new government changes the pensions goalposts? How can we be sure our pots won’t be unceremoniously raided in years to come?

We can’t. It’s as simple as that.

Experts fear that there may only be one way to make pensions good again: ban party politics altogether.

Giving power to an independent body, they say, could pave the way for the essential, sustainable reforms needed to stave off a nationwide retirement crisis. Finally, pensions could be made attractive again.

And after the emergency Budget left ‘the most important pensions questions answered’, the clamour to take politics out of pensions has intensified.

Former Treasury adviser, Ros Altmann, has called for a new non-political commission of the best pensions minds to work closely with new minister, Steve Webb, to overhaul the current system and introduce sustainable policies.

‘You’ll work till you drop’: Britons stop saving into pensions

Pensions are too important for politicians

Once properly reformed, overall responsibility for Britain’s pension system could then be permanently handed over to this independently-appointed body, ending the political toing-and-froing that has tainted the past 30 years.

Altmann said: ‘We need an independent body responsible for pensions. These issues are too important to allow party politics to stop decisions being taken for the good of the country.

‘If we had an independent body that’s set in and lasts, we could begin to get to grips with what has become a very serious crisis by making sure that pensions policy stays out of political meddling in future.’

Every week a new report shows the financial torture awaiting many of the Britons who will retire in the coming decades.

Nearly 20% of over 55s still have a mortgage, with an average loan of £50,000, described by insurer Aviva as ‘a significant debt burden’.

Furthermore, a quarter has less than £2,000 in savings, while only 13% have more than £100,000 to see them through old age.

It means millions of over-50s are on a ‘collision course with an impoverished retirement’, with almost eight in ten set to receive an annual income worth less than £8,000.

It smacks of an uncomfortable reality: a generation of Britons has lost touch with the ‘savings culture’, disillusioned by constantly flip-flopping pension saving rules and a general lack of clarity when it comes to state benefits in old age.

Now just 14.5m Britons – fewer than 40% of the working-age population – have any sort of pension, according to the Department for Work and Pensions.

Source: http://www.thisismoney.co.uk/pensions/article.html?in_article_id=504342&in_page_id=6

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