Retirement Income 

Government omits pensions from ways to save

Government omits pensions from ways to save

Industry figures have slammed HM Treasury for releasing an infographic for the public which shows how to save throughout a person's life but does not mention pensions.

Former pensions minister Baroness Ros Altmann said the leaflet was further evidence of concerns she has formerly expressed about HM Treasury's attitude towards pensions.

She said: "During my time as pensions minister, there was clearly a difference of view between HM Treasury and the Department for Work & Pensions about private pensions.

"HM Treasury sees them as a cost to the Exchequer. DWP sees them as a benefit for people to give them a better later life standard of living. That is how most people see them and why they are so important."

She added HM Treasury is trying to promote Isas but nobody is currently promoting pensions.

In October, the industry collectively decried the lack of joined-up thinking between HM Treasury and the Department for Work & Pensions with regard to private pensions and pension savings.

At the time leading the complaint was ex-pensions minister Sir Steve Webb, now director of policy at Royal London, who said there are two separate different "world views" which prevent coherence in government.

Baroness Altman said: "Anyone using a Lifetime Isa, instead of a pension, is likely to end up with less in later life. Private pensions are far better than Isas in terms of their behavioural design.

"Using a pension, instead of a Lifetime Isa, should ensure you have more money in later life. Future governments will have to deal with the consequences of more poor pensioners, and greater strains will fall again on younger generations."

Baroness Altmann highlighted the fact that pensions have many advantages over Isas, whereby it is possible to get free money from your employer, more government contribution to your savings, controls on the charges, better investment options for long-term growth and behavioural nudges to stop you spending the money too soon.

She said: "If you care about private pensions and believe they are worth fighting for, now is the time to stand up and shout about their benefits: Before it's too late and they are supplanted by an inferior product because of short-sighted policy making that will leave long-term dangers."

Tom McPhail, head of retirement policy at Hargreaves Lansdown, agreed the government's leaflet was misguided.

He said: “This is illustrative of the government’s struggle to present a coherent joined-up policy on savings, investments and provision for later life; it’s as if they’ve completely forgotten about pensions and help to save.

"The Treasury and the DWP have to be able to show that their respective policies across long-term saving, retirement and the ageing society actually join together in ways that work for ordinary investors.”