28/1/2010
By Sophie Baker
The National Employment Savings Trust (NEST) is set to fail as it is built on ‘shaky’ foundations, according to Steve Webb, the Liberal Democrats’ front bench work and pensions spokesperson.
Speaking at a seminar on regulation and risk in defined contribution schemes organised by the Pensions Advisory Service (TPAS) on 28 January, Webb argued that the imminent savings crisis facing the UK was due to its “useless, hopeless and pathetic” basic state pension.
“We’re building a NEST on a tree that has poor roots – they’re rotten,” said Webb.
In a reference to means testing, Webb said that a scheme that allowed people to save on top of a basic minimum retirement benefit from the State would not cause him concern: “But we don’t have a rational piece of policy – we need to get the state foundation right.”
Webb has already gone on record saying that the basic state pension is simply too little to live on and argued that a more generous, universal pension would give pensioners “a sense of dignity and a stable income in retirement”.
All three major parties are currently committed to restoring the earnings link to the basic state pension, which was cut in 1980 by the then Conservative Government. Webb, however, wants to see the basic state pension and State Second Pension (S2P) rolled into one. “It doesn’t make sense to have them as they are,” he said.
Webb also suggested that the NEST scheme could prove to be far more popular with the general public if members were able to retrieve up to a quarter of their total savings for any emergency or lifestyle change that would need financial backing.
“Early access could be a way of encouraging NEST,” he said. “Government needs to remember it’s your money - why shouldn’t you spend it the way you want to?”
Other stories you may find of interest:
Pre-Budget Report reveals changes
The Government has announced in the Pre-Budget Report 2009 that it is adjusting some of the pension reforms
PPF doing a good job so far, says NAO
The Pension Protection Fund (PPF) must ensure that it continues to provide value for money when it comes to investment, especially as more schemes are transferring into its lifeboat, says the National Audit Office (NAO).
NAPF calls for more flexible 2012 timescales, and survey shows education could improve pensions situation
A radical rethink is necessary on the Department for Work and Pensions'' (DWP) consultation on auto-enrolment rules, as they could lead to high costs for employers and the leveling down of existing pension provision, warns the National Association of Pension Funds (NAPF)
