§ Mr. WigginTo ask the Secretary of State for Work and Pensions what incentives the Government are offering to young people to begin saving for pensions. [186686]
§ Malcolm WicksWe recognise that pension saving is far more affordable when done over a long period and the key is for young people to start taking action early in life as they become financially independent and enter the workplace for the first time.
Through our Informed Choice1 programme we are encouraging all people, including young people, to plan ahead. We are doing this by making them aware of their options and ensuring they have the right information at the right time, together with the basic financial awareness and skills, to help them make appropriate choices. The range of initiatives include measures to: 1121W maximise workplace pensions savings, provide personalised information about an individual's forecasted state and occupational/private pension positions, working with employers to provide information and advice in the workplace, and introducing a new web-based retirement planner.
Furthermore, the national Financial Capability Strategy, led by the Financial Services Authority and set out in two recent FSA documents2, is working to address the financial capability needs, including those related to saving for retirement, for all groups, including young people.
We already provide incentives to encourage long-term savings by giving more generous tax treatment on pensions than on other forms of investment. Pensions are one of the most efficient ways of saving for all age groups. To encourage and reassure individuals who save in occupational pensions that their pension is secure, the Pension Protection Fund, will, for the first time in the UK, serve to protect members of defined benefit schemes if their sponsoring employer becomes insolvent and the scheme is under-funded.
We are also introducing other measures to encourage the savings habit. For example, in June, we announced our proposals for the stakeholder suite of simple, low-co#t, risk-controlled savings and investment products to meet the needs of all, including the young, for their short, medium and long-term needs. Measures such as the Savings Gateway, the Universal Banking Services, the Community Finance and Learning Initiative and the introduction of the Child Trust Fund, also serve to encourage young people to engage with the financial sector.
1Command paper, Simplicity, Security and Choice: Informed Choices for working and saving.2Towards a National Strategy for Financial Capability, November 2003 and Building Financial Capability in the UK, May 2004.