Give the people certainty

In our recent response to the government white paper ‘security in retirement
– towards a new pensions system’ we called for a pensions’ fair deal for all,
while questioning the fairness of the proposed new pension scheme, dubbed the

ACCA’s main worry is that the new system of personal accounts could encourage
employers to forget about running occupational schemes altogether and push their
staff towards the new scheme instead.

We are also concerned about how the government will persuade and encourage
people to save. The message that Brits aren’t saving enough is not getting

Policy makers will have to think creatively of ways to instill a pensions and
savings culture in the UK. As an Australian, I can see how the UK is playing
catch-up with Down Under, which ten years ago was also facing an ageing
population who didn’t save, a state pension in decline and underfunded public
sector pensions.

In 1992, the Australian government introduced a series of reforms which look
remarkably similar to those proposed in the UK. Australian employers paid 3%
into a superannuation scheme, which has now risen to 9%. Employers were
initially against this move, but the legalities of the system gave employers no

In July 2005, research by ACNielsen in Australia found from its 1,500
respondents that awareness of superannuation choices had increased by 43% to
93%, appearing to show the Australian government’s awareness drive was hitting
home. Their ‘Super Choices’ campaign seems an effective way of helping employees
make informed choices about the pension funds available to them. The UK
government would need to communicate pensions’ choices in a similarly clear way.

ACCA fully supports the principle that individuals should be encouraged to
save for their retirement. We believe the tax and benefit systems should be used
in positive ways to incentivise people to do this. But we must also face

Not everyone will be in a position to invest sufficient money in a long-term
savings scheme to create a fund which will produce a decent level of retirement

Any plan for the long-term future of UK pensions must therefore be based on
an enhanced level of basic state pension provision, with material encouragement
given to people to supplement that guaranteed income by saving voluntarily via
the private pensions market.

People are crying out for certainty in the pensions architecture and
government should commit to minimal changes going forward to enable people to
plan properly.

Allen Blewitt is chief executive of ACCA

Related reading