Private sector workers offered guaranteed lifetime pension income

Summarised from 2 outlets · Updated 3 Nov, 13:12 · Archive

The government is requiring pension providers to offer guaranteed lifetime income to around 17 million private sector workers by default, under plans announced by pensions minister Torsten Bell on Tuesday. The scheme, called 'Guided Retirement', aims to close the retirement savings gap between public and private sectors by providing an inflation-protected income for life, similar to the defined benefit pensions that public sector workers typically receive.

Most private sector workers currently save into defined contribution schemes where their retirement income depends on how much they have saved and how well investments perform. The government said that in 2025-26 some 46 per cent of first-time pension pot accesses emptied the funds entirely. The new system would use Retirement Collective Pension Schemes to pool risk and help guaranteed incomes keep up with the cost of living.

However, critics have raised concerns about the plans. Steve Webb, a pensions expert at consultancy LCP, pointed out that most people do not currently choose annuities and would not be able to change their mind later. The Daily Mail reports that experts worry the plan undermines pension freedoms reforms brought in under the previous coalition government.

How it is being reported

• Labour's new nanny state drive on private pensions: Fears plan for 'incomes for life' will leave people 'locked in' to deals they don't wantPensions minister Torsten Bell unveiled proposals for 'guided retirements', requiring providers to put people on to annuity-style deals unless they actively opt out.Daily Mail · 3 Nov, 12:55
• Private workers to get guaranteed pension income for life in bid to close savings gapPrivate sector workers are set to be given access to guaranteed pension income for life, as the government aims to close the retirement savings gap between the public and private sector. Under new plans set out by pensions minister Torsten Bell on Tuesday, providers will be required to offer workers an annual income as standard [...]City AM · 3 Nov, 11:08

In this story: Torsten Bell · Steve Webb · Labour · UK

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