Pensions future is uncertain

MONDAY, OCTOBER 09, 2006

A pensions research institute has hit out against the government's recent white paper, saying that it will not solve current problems with the pension system. The Pensions Policy Institute (PPI) has said that the system is too complex and leaves too many people uncertain of their futures.

The paper proposed a system whereby centralised employer pension accounts for each worker are automatically set up by the government, which allow private schemes to be combined with current state benefits and thus placing more responsibility on the employer and the individual to contribute to a private scheme.

"Auto-enrolment into private pension provision has potential advantages which should lead to an increase in the number of people saving for their retirement," said Niki Cleal, director of the PPI. "But the white paper may set unrealistically optimistic expectations for what personal accounts can achieve," she cautioned.

Ms Cleal added: "The PPI would like to see more detailed analysis to establish whether alternative state pension reform options could provide a better foundation for personal accounts." In the current climate, many pensioners are finding that a homeowner loan is the best way of releasing capital and managing their income.