Pensions means-testing 'will deter contributions'

Monday, May 24th 2010

If means-testing is introduced to private pension scheme investments, it could deter Britons from making contributions.

This is the warning of Dr Ros Altmann, who explained this may be the case for almost half of pensioners.

But she also welcomed the urgency of the new cabinet to restructure the system, which they are beginning to do.

"The first step is to reform the state pension, so that it forms a stable base on which private long-term savings can be built," Dr Altmann continued.

It is necessary to introduce adequate reforms to prevent harsh taxation among workers to create funds for the older generations, she added.

The comments follow a manifesto from the coalition government, published on May 20th.

This included plans to protect benefits such as the winter fuel allowance and free bus travel for older people.

And the National Association of Pension Funds said it supported the plans for reformation in the industry.