Savers must hit back over unfair private DC schemes
Private sector workers with “unfair” defined contribution pension schemes must be more vocal and demand a better deal from the government, Jason Riddle, co-founder of Save Our Savers, has said.
As public sector workers prepare to strike over their defined benefit pension schemes, Mr Riddle said private sector employees need to fight back against their own DC schemes, which he said were “not fit for purpose”.
He said: “The private sector should be stronger in voicing opinions on pensions and savings. It is being given a hard time, yet it is essential to a robust economy.
“Annuity rates have fallen by 45 per cent over the past 16 years, so all a typical pensioner can afford is a fixed income, guaranteeing that living standards will fall. Workers in the private sector feel so helpless.”
Mr Riddle suggested the government could help reduce this burden on private pension savers by guaranteeing some form of minimum income should the economy take a nose-dive.
He said: “Savers don’t have the ability to ride the economic cycle in the same way the government does, so the state could offer to step in when times are hard.
“If you retire shortly after the stock market has crashed, your savings could have gone down 40 per cent. Should this happen, the government could guarantee you’ll get a safety net to plug the difference.”
However, Mr Riddle said this was just one idea intended to spark a wider debate about how to improve the country’s savings rate.
Having launched in January 2010, Mr Riddle said Save Our Savers will now focus on lobbying ministers and politicians to influence decision making.
He said: “It is now time for action and getting politicians and the finance industry on board and to mobilise savers to protest against not being treated fairly.
“The private saver may not have the fearful bite of the public sector unions but the consequences of disregarding their needs will have a far more lasting and damaging effect on the economy.”
In one of its first public demonstrations, Save Our Savers will be holding a rally on 6 October, from 11am to 1pm, at the Bank of England protest against what Mr Riddle says is the monetary policy committee’s inability to keep inflation under control.
Scott Gallacher, director for Leicester-based Rowley Turton, said the nation needed to save more, but a government guarantee on pensions was not the answer.
He said: “People in DC schemes should de-risk in the years leading up to retirement, while for people under 50, the market crash is the best thing that can happen.
“This is because the money they pay into their pensions will buy 10 per cent or 20 per cent more. It’s a sale on the world’s greatest companies. We need to save more, but if the state puts in safety nets there will be less incentive for people to save.”
