Pensions & savings
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Wealth & assets

Submission: Work and Pensions’ Select Committee evidence

Patrick Stevens
Patrick Stevens

This memorandum to the Work and Pensions Select Committee inquiry into the Government’s proposals for personal accounts focuses on the advice needs of people on low to moderate incomes in light of the Government’s proposals to introduce a new system of personal accounts. 

Key points

  • The introduction of personal accounts offers an opportunity to significantly improve retirement income and security for people on low to moderate incomes. However, the new scheme will only be successful if people understand the options available to them and are able to make the right decisions. Developing an effective advice regime is therefore essential to support personal accounts, as well as the Government’s wider reforms to the pensions system.
  • This means going beyond the provision of information to deliver advice that enables people to understand their pension choices alongside their wider financial decisions and circumstances. The key to achieving this is to increase access to generic financial advice. This analysis has been endorsed by this Committee and by the Treasury Committee in previous reports on pension reform. However, although the White Paper on personal accounts flags up the need to develop an information strategy, this issue has so far been largely overlooked in the reform process.
  • The Resolution Foundation has developed proposals to deliver generic financial advice to people on low to moderate incomes, the key target group identified by the Government for personal accounts. We have also published research highlighting the significant benefits this could deliver in terms of increased retirement income and reduced expenditure on Pension Credit.
  • This inquiry provides an important opportunity to place the delivery of generic financial advice at the heart of the debate about the design of personal accounts, and to link the pension reform and financial capability agendas with the aim of achieving a step change in the long term financial health of the nation.

Further reading

Ineffective Savings Accounts
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Molly Broome
In too deep?
The impact of the cost of living crisis on household debt
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Felicia Odamtten, Simon Pittaway
Precautionary tales
Tackling the problem of low saving among UK households
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Molly Broome, Ian Mulheirn, Simon Pittaway
Patrick Stevens
Patrick Stevens Trustee