Oral Answers to Questions

Gregg McClymont Excerpts

Monday 1st July 2013 Commons Chamber

[Steve Webb]

My hon. Friend is right. The danger with the current system is that people who save find that the Government come along and say, “You’ve saved some money—we’ll take some money off you.” Our intention is to encourage, not penalise, saving. Paying a single, simple, decent pension just above the level of the basic means test will greatly enhance those incentives.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The Government’s case for the new state pension is that it will increase the incentive to save in private pensions, but does the Minister agree with his hon. Friend the Member for Warrington South (David Mowat), a Treasury Parliamentary Private Secretary? He told the House during Second Reading of the Pensions Bill:

“One reason that people are not saving is that there is massive distrust of the industry. I have many colleagues in the private sector who would almost cut their arms off than invest in the pensions market.—[Official Report, 17 June 2013; Vol. 564, c. 712.]

What will the Minister to encourage people to make those savings in private pensions?

[Steve Webb]

I agree with the hon. Gentleman to the extent that there is mistrust of private pensions, which is why we have taken strong action,: for example, we have banned consultancy charges, which were a source of concern. On savings incentives, if he looks at our analysis, he will find that low earners in particular will have much smaller withdrawal rates when they save. Therefore, the return on savings, particularly for low earners, about whom I am sure he is most concerned, will be enhanced by the proposals.