Scottish Widows comments on the Pensions Bill

Ian Naismith, head of pensions market development, Scottish Widows comments on the Pensions Bill: “Scottish Widows welcomes the Pensions Bill, which will put in place much needed changes to State pensions as the first stage in a coherent package of reforms. We recognise that the changes will significantly improve the State pensions of many women and other carers, and will reduce the number of people on means-tested benefits in the longer term. While we would have liked a much simpler State pension system, we recognise the difficulties in achieving that given the starting-point.

“Any changes to pensions policy must be considered against the backdrop of falling pensions savings in the UK. The Scottish Widows Pensions index which tracks the percentage of those expected to be saving adequately fell from 55% in 2005 to 46% in 2006. It is vital that we reverse this decline, and the package of measures in the Bill form a solid foundation for that. It is important that the structure of Personal Accounts, which will be announced in a White Paper next month, leads to a significant increase to pensions coverage without impacting heavily on good existing employer provision.

“We still have concerns about the effects of the White Paper changes on some groups. In particular, the lower paid self-employed will continue to lose out. They have no access to the State Second Pension or to employer contributions, and changes to means-testing could lead to them losing Pension Credit pound-for-pound when they have modest personal income in retirement. This issue needs to be addressed.

“We welcome the establishment of a Delivery Authority for Personal Accounts, and look forward to working with it to achieve an outcome that is beneficial for consumers.

“Finally, we re-emphasise the importance of consumer education. Many people have entirely unrealistic expectation of retiring at 60 or earlier based on their current inadequate savings. Only through a firm understanding of what they will get when, and how much needs to be put aside to ensure a comfortable retirement, will people begin to realise the need to save more for themselves.”