Steve Webb, the Pensions Minister, feels that there should be a guarantee of some kind for people who pay into pensions. A very admirable sentiment to be sure, he is championing the cause of the employee in suggesting that they should get back at least as much as they put in to any company pension. He also goes on to say that he is “convinced people have a huge appetite for certainty about pension savings”.
That’s all well and good, I’m sure a lot of people do. But how realistic is a guarantee? What happens if the Company goes bust? Who will pick up the tab then? I surely do not need to get into the debate about whether it is possible for a big insurance company to go bust as recent history proves that there is no such thing as a “fireproof company”. The government itself has proved time and time again that in the financial world there is no such thing as a guarantee. I cannot see how or why anyone should commit to something that is in the long term.
However, putting this aside, do we really believe that the public are committed to pensions as a form of savings? Auto enrolment, and specifically the numbers that choose to ‘opt out’, will likely provide us with the best indicator of this as it is rolled out in the months and years ahead.