Darling hits back at pensions industry

Alistair Darling addressing the conference

British companies and their shareholders may have been too hasty over the closure of final salary pension schemes, the government has said.

The comments came from the Secretary of State for Work and Pensions, Alistair Darling, as he addressed pensions professionals at their annual conference.

One of the key issues is how we make pensions simpler and easier to understand for people who need them

Alistair Darling
Secretary of State for Work and Pensions

But Mr Darling admitted that the government needed to simplify the complexity surrounding pension schemes.

On Thursday, the government was accused of not caring about the future of employer-based pension schemes.

Mr Darling retaliated by saying: "Companies and their shareholders need to take a long term look."

And in an attack on pension fund management, as well as red tape, he said it was important to ensure "that as much goes into the pot as possible, and not on the cost of selling or running the pension fund".

Complex and confusing

Mr Darling acknowledged that the current regulatory system was a heavy burden on companies.

He said that the government planned reforms aimed at helping company schemes operate more effectively.

Nothing I have seen or read over the last few months has changed my view that the basic structure of pensions in this country is right

Alistair Darling

And he added that the government also needed to provide new options for saving towards retirement.

"One of the key issues is how we make pensions simpler and easier to understand for people who need them," Mr Darling said.

Tight-lipped

Proposals for 'over-the-counter-products' were expected to be included in the text of his speech, but failed to materialise.

Mr Darling was, as expected tight-lipped about details in the government's plans.

The government has made it clear that it will not make any major announcements until the publication of two reviews into the pensions industry.

Ron Sandler, the former chief executive of Lloyd's of London, is looking into competition in the retail investment industry, including personal pensions.

While another review into how pensions can be simplified is being conducted by Alan Pickering, the government's pension adviser.

As Mr Darling announced in March, the government's proposals will be published in the autumn, following publications of the Pickering and Sandler reports in the summer.

State pension

Mr Darling ruled out a major overhaul of the pensions system's current structure.

"Nothing I have seen or read over the last few months has changed my view that the basic structure of pensions in this country is right.

"It is affordable and workable - the essential elements for any system to endure."

But he said that people on moderate and higher incomes should be saving in a separate pension.

"Clearly our objective must be to get people to save more for the future over and above what the state will provide, with a good second pension.

"And we firmly believe that people on moderate and higher incomes will be better off, in the longer term, in funded pensions."