The UK needs an independent savings commissioner tasked with developing policy, free of the electoral cycle, to catalyse a broad-based, retirement saving culture, according to Michael Johnson, research fellow at the Centre for Policy Studies.
He argued that retirement saving needs to be placed above politics in order to confront “some very difficult home truths” and facilitate tough decision-making.
Mr Johnson called upon the Department for Work and Pensions and the Treasury to co-sponsor the plan in order to avoid the “pushmi-pullyu behaviour” previously exhibited between government departments.
“The DWP wants people to save, whereas the Treasury favours consumption (not least to bolster Vat receipts),” he added.
Mr Johnson explained that the commissioner’s guiding principle should be to act in the long-term national interest, ideally with nothing deemed ‘out of scope’.
“With ‘generation Y’ very much in mind, the word ‘pension’ should be de-emphasised.”
In his statement, Mr Johnson accused successive governments of parking pensions in the ‘too difficult’ box, perpetuating intra-generational injustice by kicking the can down the road.
Someone should have been in place to have robustly challenged the 2012/13’s spend of £54bn on incentivising pension saving, he continued, “when it is predominately used as a personal tax planning ruse by the wealthy”.
“In addition, the industry is drowning under a Niagara of hugely complex rules, and it is ultimately customers who pay for the industry’s regulatory burden.
“The blunt instrument that is classical regulation is wholly unsuited to engendering trust between consumers and the industry and it has, to date, failed to control the industry’s excesses.”
However, consumers come in for criticism too, as Mr Johnson concluded: “Individuals must assume more responsibility for providing for their own retirement incomes; the corollary of today’s excessive consumption is under-saving for tomorrow.”
