BC&E: ‘Ignore risk of pension extinction’

Mr Fiveash, head of customer solutions for B&CE, provider of the People’s Pension workplace scheme, said advisers should encourage clients to embrace auto-enrolment.

Speaking after independent pensions specialist Michael Johnson suggested last year that pensions could be extinct by 2050, Mr Fiveash said: “It would be wrong to tell people not to take advantage of auto-enrolment and miss out on a matched employer contribution.

“Getting people saving in their 20s and 30s will be difficult, hopefully inertia means it will happen.”

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Mr Fiveash rejected suggestions that an Isa could be a viable alternative to pension saving.

He said: “Accumulating funds for retirement requires financial discipline, and the danger of just saving into an Isa is that the amount saved will be eaten into, leaving the final sum insufficient for a comfortable retirement.

“Pensions are an excellent means of instilling fiscal discipline in the policyholder, purely due to their inflexibility.

“While this may seem like an extreme means of saving now, when generation Y starts to see their parents having to choose whether to eat or heat, they may start to see the benefit of pensions.”

Adviser view

David Trenner, technical director for Glasgow-based Intelligent Pensions, said: “There is no question that for younger people private pensions are rarely a good idea. There are likely to be more short-term needs for cash such as buying a home and providing for children.

“We should think seriously about offering early access to pensions, perhaps by way of a loan against anticipated tax-free cash.”