Pensions ‘final and frightening’

More people could be encouraged to invest in pension schemes if they were made more flexible and less “frightening”, and maybe even given a new name, according to the director-general of Saga. Dr Ros Altmann said that people associate the word “pension” with scandals and disappointments, and find most of the language used to explain the schemes “alien”. “I would like to find a new word for pension – lifetime savings or retirement savings – something that does not have negative connotations,” she said.

Arguing that people are put off saving because they are offered a “stark choice” between not taking out a pension or locking their money away for years she called for schemes to be made more flexible. Currently many people see pensions as something that is only relevant to older people and “final and quite frightening”, according to Dr Altmann, and making it possible for workers to remove funds if they needed to could help encourage them to save. She said: “For me, the most important thing is to get people into the habit of saving. Pensions are just one product.”

On October 1 the Government will begin a landmark scheme that will see up to 10 million people automatically enrol in pension schemes. From, next month employers with 120,000 or more workers will have to place eligible employees into pensions. Smaller firms will gradually be enrolled in the scheme before 2018.

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