UK 'let down' over pensions

The NAPF's annual conference is meeting in Brighton

The head of the UK pension fund industry has accused the Chancellor Gordon Brown of failing to care about the impending pensions crisis and the closure of final salary schemes.

The government is at best neutral about whether (employers) make pension provision for their employees

Peter Thompson, NAPF chairman

In an address to the National Association of Pension Funds (NAPF) annual conference, chairman Peter Thompson said that last month's Budget was a "disappointment" and "another missed opportunity" for employer-sponsored schemes.

 Peter Thompson's speech in full

Mr Thompson indicated that there was a danger that the government was too focused on the NHS at the expense of improved retirement provision.

He said: "The Chancellor seems to think we should all have a long, healthy and poor retirement. Maybe this is in tune with his puritan principles."

Missed opportunity

About 900 pensions managers, fund trustees and company finance directors are meeting to discuss the current pensions crisis.

Over the last couple of years there has been growing concern that people are not saving enough for their retirement.

And in recent months there have been widespread fears over company pensions, as increasing numbers of employers have cut back contributions or closed generous final salary schemes.

On Thursday morning, Mr Thompson attacked the government for specifically failing to recognise the contribution of these employer-sponsored schemes, which had been the "cornerstone of pension provision for millions of workers in the last few decades".

Mr Thompson said he doubted that the government was bothered by the closure of final salary schemes, and called on the government to play its role in encouraging saving for retirement through fiscal and regulatory measures.

"The government is at best neutral about whether they [employers] make pension provision for their employees," he said.

He said that the myth of a flexible labour market was a widely peddled "myth" - and that the government should be concerned about the overall reduction in retirement savings.

Plans backfiring

In the government's Green Paper "Partnership in Pensions", published in December 1998, it predicted that by 2050 the proportion of pensioner income coming from private provision would have increased from 40% to 60%.

However, Mr Thompson said that the government's pension policies now meant that dependence on the state was increasing not diminishing.

Complexity has been a constant complaint about the pensions industry both from outside and within - and the pensions industry is eagerly anticipating two reviews which are looking at simplification of the pensions industry.

In the meantime, Mr Thompson called on the government to introduce more favourable tax treatment to encourage people to save for their retirements.

In his speech, he suggested giving all basic-rate taxpayers higher-rate relief on pension savings.

He also said that the industry would like the government to reaffirm its commitment to pensions.

Work and Pensions Minister Alistair Darling will be speaking at the conference on Friday morning.

"I for one will be listening very carefully for signs of a government commitment to the continuing success of employer-sponsored retirement provision," he said.