Baroness Ros Altmann has said pensions could be under threat from upcoming “economic turmoil” in a veiled reference to the European Union referendum.
Britain goes to the polls on 23 June to decide whether to leave the European Union or remain a part of the political, economic and trade block.
Speaking at the Marketforce annual conference in London today (8 June), the pensions minister warned of the impact on pensions of any changes to the UK econony.
She said: “Anything we do to damage the UK economy, which we might be about to do, will jeopardise all of this framework of pensions.
“Pensions are under threat, not just from the economic turmoil we might be about to embark on, but from other things that are more homegrown.”
Jane Hodges, chief operating officer at Alexander House Financial Services Ltd, said she agreed with the pensions minister that people had not taken time to think the decision to leave the European Union through.
“I think when people think about their pensions they do not really understand or get where pensions are being invested.
“Issues like Brexit will absolutely have an impact on pensions.”
Last month analysis from HM Treasury showed a vote to leave the European Union could negatively impact the UK state pension.
HM Treasury analysis suggested a Brexit would cause inflation to rise, eroding the value of state pension increases, costing pensioners £137 a year.
Those with an additional pension pot worth £60,000 would see its value drop by £1,900, HM Treasury stated.
Baroness Altmann also used her speech at Marketforce’s conference to deliver an update on some of the initiatives the Department for Work & Pensions is doing to make pensions work better for consumers, such as the cap on exit fees and regulation of master trusts.
She said one of the issues she is trying to get “on the table” is the issue of net pay schemes.
Baroness Altmann said: “In a room full of trustees the other day I found many of them didn’t know about this.
“If you are enrolling - or allowing to join - workers who earn less than £11,000 a year they are getting a 25 per cent penalty on their pension by virtue of the way the pension is administered.
“It is important people understand the issue because of all the people who are auto-enrolled, surely the lowest earners are the ones who need the best value yet they are being forced unknowingly to pay so much more for their pension.”
Baroness Altmann also added while the government has not yet introduced auto-escalation of pension contributions, that doesn’t prevent individual employers from raising the amount that goes into retirement savings pots.
She said some were increasing their contribution to employee pension pots, which she encouraged.