Pensions  

Webb: department for pensions needed for reform

Webb: department for pensions needed for reform

Steve Webb has advocated creating an entire government department to handle pensions and the aging population.

The Lib Dem pensions minister told an event at the Resolution Foundation in London reform was hampered by “silo-isation”.

In his speech he looked forward at what reforms would be needed beyond the next general election.

Article continues after advert

He said the next pensions minister, admitting it may not be himself, would have to look at increasing auto-enrolment contributions beyond 8 per cent and tackling tax relief.

Mr Webb said: “Why don’t we have a department for pensions and the ageing society?

“We could deal with pensions but what about long-term care and long-term savings and seeing the person rather than the policy area?

“We would think about how the labour market affects what happens in retirement.”

He bemoaned the fact that many issues that affect pensions are not the responsibility of the pensions minister - including some savings which are the responsibility of HM Treasury and long-term care which is looked after by the Department of Health.

Mr Webb advocated the use of auto-escalation, which mean a person’s pension contributions would rise in line with rises in their pay, to get people contributing more than 8 per cent to their workplace pension.

He also suggested creating a simpler flat tax relief rate of around 33 per cent - which he said would allow the government to claim it would be giving £1 for every £2 contribution.

Mr Webb said: “Rather than just float around the edges of tax relief, let’s do it properly.

“But if you do reform tax relief you could abolish the lifetime limit.

“One of the things I have learnt in my current role is how long it takes to do stuff and the new pensions minister needs to sit down, get all the dirty laundry out and build a consensus.”

Another issue Mr Webb addressed was social care and he claimed the cap on costs coming into force in April 2016 would cut expenses and encourage the insurance industry to offer products for that market.