17 July 2006 - Personal accounts will create new retirement saving culture - Hutton
Automatic enrolment into a system of personal accounts will tackle the culture of under-saving for retirement and be good news for consumers, Secretary of State for Work and Pensions John Hutton said today.
Mr Hutton and Pensions Reform Minister James Purnell kick-started the consultation on the model for personal accounts proposed in the recent White Paper on Pension Reform.
Launching the event in London, John Hutton, Secretary of State for Work and Pensions, said:
“We need to tackle the culture of under-saving, particularly among lower earners. We believe the best way to get more people saving is to automatically enrol them into personal accounts.
“ As we take our proposals forward, our priority will be to encourage industry to lower its charges, which should help ensure people keep up to 20 per cent more of their private savings.”
James Purnell, Minister for Pensions Reform, said:
“ The aim of our radical reforms is to embed a new savings culture which will see up to 10 million people, many of whom are currently not saving for retirement, benefit from a system of low-cost personal accounts.
“Getting more people saving is crucial to avoiding a pension crisis in the future. People recognise that they need to save more. We are now working with industry and employers to make this simple and easy to do.
“It is also estimated that personal accounts will generate an additional £4-5 billion of saving – equivalent to half a per cent of GDP.”
On the National Pensions Day in March a representative sample of the UK population debated pensions reform. Nearly three-quarters (72 per cent) thought that ‘employees should be automatically enrolled with the choice to opt out’.
This finding is supported by in-depth, qualitative research into public attitudes to personal accounts published today by the DWP. It was carried out on behalf of DWP by the Ipsos MORI Social Research Institute, in early 2006, following the Pensions Commission’s second report. The research, published today, found that the public recognise they need to save more and welcome the idea of personal accounts. They support automatic enrolment and believe it will tackle under-saving. Employers’ contributions were viewed as an important incentive to save.
Notes to Editors
- John Hutton and James Purnell were speaking at the Government’s Pensions Summit on personal accounts in London.
- Presentations were given by representatives from the ABI, NAPF, Norwich Union, TUC, CBI, IMA, BBA and Which?
- The Department for Work and Pensions published its White Paper on Pension Reform – Security in Retirement: towards a new pensions system, 25th May, 2006.
- Copies are available at http://www.dwp.gov.uk/pensionsreform/
- The consultation period will end on 11 September 2006.
- This qualitative research into Public Attitudes to Personal Accounts was carried out on behalf of the DWP by the Ipsos MORI Social Research Institute. Fieldwork took place in January and February 2006. The report is available on: http://www.dwp.gov.uk/asd/asd5/rrs-index.asp
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