Duncan Smith: It pays to save
Ian Duncan Smith will give a speech to Age UK outlining his pension reforms. He will say:
“We have to fundamentally simplify the system. And we have to make it crystal clear to young savers that it pays to save.
“We have made a start by pushing ahead with plans for auto-enrolment, building on the groundwork laid by Lord Turner back in 2005. By providing a low-cost and dependable pension scheme for those who wouldn’t otherwise put money aside, we can start to push up savings rates and move away from a culture of debt.
“But auto-enrolment cannot solve the savings challenge on its own, and we have to be prepared to look at the other side of the equation. We now have to look at the state pension.
“The state pension system is so complex that most people have no idea what it will mean for them now and in their retirement. And too many people on low incomes who do the right thing in saving for their retirement find those savings clawed back through means-testing.
“We have to change this. We have to send out a clear message across both the welfare and pension systems – you will be better off in work than on benefits, and you will be better off in retirement if you save.
“I seek a debate on the next generation of pension reform. I want a state pensions system fit for a 21st century welfare system, which is easy to understand and rewards those who do the right thing and save.
“My department has been working closely with colleagues at the Treasury on options for reform. As the chancellor made clear late last year, he is keen to look at options for simplifying the pension system, and that is precisely what we are doing.
“Too often we forget that this isn’t just a system for those who are currently retired, but also for those who will need it in the years ahead. That is why, together, we must make it work not just now but down through the generations, and make sure we leave hope and stability for those generations to come.”
