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Pensions Confidence 'Must Be Restored'
The Guardian, January 21, 2004
The public needs to be convinced that setting money aside for
retirement will pay off if the savings gap is to be closed, a consumer
group said today.
The National Consumer Council (NCC) said that restoring the public's
confidence in long-term saving would take much more than just a stock
market recovery and the introduction of new low-cost, stakeholder-style
savings products.
Rather, the group called on the government and the savings industry to put
the needs of ordinary people first by introducing fairer and simpler
savings incentives, better access to financial advice and affordable
savings products.
In its evidence to the Treasury select committee, which is currently
investigating how to restore confidence in the long-term savings industry,
the group said that although low-cost products were a good idea, they were
not the sole answer to the problem.
"MPs should not get bogged down in a debate about the size and
severity of the savings gap nor pin too much faith in simple, low cost
savings products as the only answer," said NCC senior researcher,
James King. "Rebuilding consumer confidence that saving for
retirement will pay off is a major, long-term challenge for the government
and the industry. Fresh ideas are needed."
He suggested that the government needed to help people take more
responsibility for their future by increasing their access to basic
financial advice and ensuring they had a right to compensation if they
were mis-sold a product.
The group also advised that the government should impose tough price caps
on stakeholder-style products, and firms should not be allowed to sell
them to consumers without ensuring they were suitable for them.
It added that research revealed that mistrust of pensions was as
significant a factor in their reluctance to save as a lack of spare cash
among people aged under 35.
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