5 December 2007
Means-testing will undermine pensions reform
John Barrett, Liberal Democrat MP for Edinburgh West, today warned that the Government’s obsession with means-testing risked undermining efforts to reform the pensions system.
The Edinburgh West MP made the comments following today’s publication of the Pensions Bill which includes a key aim to encourage people to save more for their retirement.
Mr Barrett has attacked the Government for the increasing use of means-testing which critics argue provides a disincentive for people to actually save.
John Barrett said:
“It is clear to everyone that our Pensions system is in desperate need of reform, however, the Government’s proposals seem merely to add further complexity into an already ludicrously complex system.
“The Government say that they will encourage people to save more for their retirements, and yet their obsession with imposing means testing simply removes any meaningful incentive to save.
“With the withering of the state pension and the spread of means-testing, people are no longer clear if it is worth their while saving or not. And with the growth in personal debt and the struggle to get on the housing ladder, pension saving inevitably takes on a low priority.
“The Government must join the growing consensus that the only long term solution is a universal state pension, which is fairer to women, uprated in line with earnings and set at a level which encourages saving by putting an end to means-testing.”