UK SAVERS are set to be offered Dutch-style collective pension schemes, after pensions minister Steve Webb announced that plans to make them legal will be included in the Queen’s speech this Wednesday.
The plans would allow savers to put their cash into collective pension pots, instead of individual saving schemes, giving them greater value for money Webb said yesterday.
They form part of a pensions overhaul which will include changes to annuities, already announced in the Budget.
But critics warn that the associated risks are higher than with stand-alone schemes and that younger savers could end up subsidising older members of the collective.
“People say, you will get a 30 per cent bigger pension. You might, you might not, but clearly it is pretty unambiguous that you will get a more certain outcome and potentially a better one,” Webb told the Sunday Telegraph.
In the past the pensions minister has described the Dutch-style schemes as “some of the best in the world”.
But pensions expert Ros Altmann has warned that the rewards may not be as dramatic as ministers hope.
“Members need to understand that there are no guarantees on their pensions in these schemes. Pensions could fall if markets do poorly. This has already happened in the Netherlands,” Altmann said, adding: “It is important not to over-hype the potential benefits of such pension arrangements.”
Despite the warnings, Altmann and others have praised the government for legalising the collective schemes, which are currently not permitted under UK law.
The policy was even announced by Labour last week, as part of its plan to help people save for retirement.
Shadow work and pensions secretary Rachel Reeves said yesterday: “We need to do much more to boost the value of people’s savings. Labour said last week we would legislate to make collective pensions schemes possible – now, just days later, ministers are following suit.”