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Webb hits back at 'paternalistic' pensions industry over mortgage plans

by William Robins on Sep 25, 2012 at 10:42

Webb hits back at 'paternalistic' pensions industry over mortgage plans

Pensions minister Steve Webb has defended the Liberal Democrat proposal of allowing pension funds to pay for housing deposits and criticised the pensions industry for being 'paternalistic'.

Webb hit back at criticism of the plans, arguing there was a gap between what real people wanted from their pension and what the pensions industry expected.

'People in the pensions industry have a religious commitment to the word “pension” but people in the real world do not,’ he said.

'The rules allow people to take 25% as tax free cash. I didn't invent that but the government gives tax relief for something that is not used as pension. Some of the pension industry are incredibly paternalistic.'

Webb repeated his calls for pension schemes to offer greater guarantees to savers even if that meant lower returns. He said the pensions industry was also mistaken to criticise low risk investment strategies such as that used by the National Employment Savings Trust.

'I go to a lot of City conferences and hear pensions experts say they know what's best for members, put them in a high risk fund when they are young.

'Sorry that's not the way I view pensions. We have to recognise that we live in economically uncertain times, if people see all the value of their savings has dropped away, what will that do to their feelings about pensions?

'They will never save to the age of 75 because they will have already given up 30 years ago.'

12 comments so far. Why not have your say?

Regulatory novice

Sep 25, 2012 at 11:15

you gotta love these guys - never really had to deal with the real world implications of hair brained policies thought up on the hoof.....

What about extending the parliamentary pension scheme to the rest of the population and we'll all share the cost and enjoy the benefit of a gold plated final salary pension scheme?

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Jennifer Storey

Sep 25, 2012 at 11:15

This man is really missing the point!!! We are encouraging people with already seriously inadequate pension savings to release money to help their children to buy an over priced property. Result, pensioners continue to live in poverty and we continue to stoke an over-inflated housing market! The idiocy of these people frightens me, lets hope they never get into power!!

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Chapman

Sep 25, 2012 at 11:33

Excellent lets put a 20 year old into something that will guarantee them their initial investment in 40 plus years?

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Allan Maxwell

Sep 25, 2012 at 11:48

I get the feeling that Mr Webb has got the issue which is the lack of knowledge and understanding among the general population of the action that they need to take to achieve a comfortable retirement. However his solution appear to be to have a go at the industry rather than try to solve the root cause which is the extremely poor level of financial education.

According to Maslow after we have satisfied our Physiological needs for food & water. We then look for Safety which includes Personal Security (a house to live in) and Financial Security (income now and in the future).

So having somewhere to live and saving for retirement should have equal priority. It is also worth noting that owning your home is not essential its just having somewhere to live.

I can't help but feel that your obsession with owning property deflects us from other equal priorities.

So I would say to Mr Webb the solution is not to conjure up some worthless guarantee but is to improve the financial education of the population to enable them to make informed decisions about their competing priorities.

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Jonathan Kirby

Sep 25, 2012 at 12:13

Oh dear,

Has Mr Webb not heard of pound cost averaging and lifestyling?

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Keith Cobby

Sep 25, 2012 at 12:19

As I have often posted before, don't worry about what Mr Webb says, only what he does.

You are on your own, the Government are not here to help you.

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Huntiams

Sep 25, 2012 at 12:31

In the absence of any coherent / consistent approach from consecutive governments is the industry not right to be slightly 'paternalistic'. It’s necessary for someone to consider the consequences and practical implications of the latest headline grabbing idea.

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Colin Pal

Sep 25, 2012 at 12:37

They have got to keep stoking the fire for the Ponzi Express to continue on its way!

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CirrusPilot

Sep 25, 2012 at 12:38

I am sorry but I have to agree with Mr Webb on the matter of PCLS for childrens deposits, why, because, if you look at it holistically, in this country in the recent passed many families have had to wait for deaths to be helped by their parents, net result is that children have to wait longer and longer before they can settle into their own properties.

With the nanny state children have been less inclined to help parents as they get older.

If , by lending children money from their pension pots, parents become both closer to their children, then that is a good thing.

I do believe that Pensions title should be changed to Later Life support, and if some of that support actually comes from children repaying their parents then that must be a good thing.

If we could get back to the old multi-generational family units, Grandparents, parents and children helping each other then we would not need the nanny state.

I know this is utopia but someone has to start somewhere.

Shields are going up now !

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j p

Sep 25, 2012 at 13:01

nonsense idea as it doesn't impact on many. And when people see their pot and think they are well off and then carve out their tfc for their kids, wait and see the illiquidity challenge.

He is the pensions minister not the housing minister

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Jonathan Kirby

Sep 25, 2012 at 13:50

If they want to look at a decent scheme that encourages people to make their own provision rather than relying on handouts, the simply look at New Zealand's Kiwisaver scheme.

It encourages people to save and people are able to make an early withdrawal of part (or all) of your savings if you're:

buying your first home

moving overseas permanently

suffering significant financial hardship

seriously ill.

And, unlike the UK plethora of poorly thought out half-hearted schemes it is actually very popular!

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MPT

Sep 25, 2012 at 22:18

Interesting article on the CII website

http://www.cii.co.uk/knowledge/policy-and-public-affairs/articles/private-third-party-pension-sponsorship-in-the-uk-a-chance-for-better-outcomes/19959

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