Government ponders compulsory retirement savings

Compulsory savings mooted

Sunday, 19, Jun 2005 12:00

People could be forced to save for their retirement, Work and Pensions Secretary David Blunkett has hinted.

Official reports suggest that more than 12 million people are not saving enough for their old age.

Prime Minister Tony Blair has previously warned that there would be "real difficulties" introducing compulsory savings, but Mr Blunkett said merely giving people information "is not enough".

"We have a responsibility to make sure there is sufficient for people to live on," he told BBC One's The Politics Show .

"I think it is a very interesting question as to whether government has a responsibility for actually making people go beyond that. But we certainly have a responsibility to ensure they know the consequences of not doing that."

"Whilst the evidence is that good information, education, awareness is vital...the truth is if four million people who have good occupational pensions to which the employer is contributing are not taking up the option of adding their resources in at this stage, we have a problem. In other words information is not enough," he added.

Stressing that the current pensions system was unsustainable because people were now living longer, Mr Blunkett hinted that he could look at compulsory saving, although he insisted he did not have a plan yet.

The Pensions Commission, charged by Mr Blair to look at ways of reforming the pensions system, is due to report in November.

Options being considered to address fears about a looming UK pension shortfall include proposals for higher taxes, a higher retirement age, or compulsory savings.

Mr Blunkett said he had an open mind on the way forward and had not ruled anything in or out.

Responding to critics who claim that the Government wishes to postpone action on the controversial pensions issue until after the next election, Mr Blunkett said that a decision would be taken within the next two years.