PFS calls on Government to act swiftly to avoid state pension train crash

23 March 2017

Statement from Personal Finance Society chief executive Keith Richards:

Successive governments have failed to address a state pension train crash waiting to happen, and it is time for the Government to act swiftly and decisively in response to the Cridland report’s disturbing but broadly pragmatic recommendations.

The report exposes the fundamental mismatch between the need to encourage people to plan and save for a longer life in retirement, and the Government’s short-termist pensions policies such as pension freedoms which encourage people to live for today.

For too long, political motivations have prevented any reform of the triple lock, which has clearly become unsustainable. Linking pension increases to earnings seems a more fiscally responsible and common sense approach and we’d urge the government to make this happen sooner rather than later.

Establishing a link between the pension age and longevity expectations has proved effective in countries including Sweden, Norway and Germany, and will introduce much needed sustainability to our system.

A mid-life MOT will help people plan for their later lives, particularly the vulnerable in our communities, and the financial advice profession stands ready to partner with the Government to deliver this service.

Without action, we are facing the prospect of severe levels of poverty in later life, and it is time that pensions regulation is considered in the context of long-term social and economic trends rather than treated as a political football.

The Government needs to seriously consider the idea of an independent pensions commission to come up with sustainable measures aimed at encouraging people to save more earlier, and not squander their wealth earlier in life.