Edinburgh 'well-placed' to benefit from pensions reform

PENSIONS minister Steve Webb will today tell Edinburgh's financial sector that it is perfectly placed to cash in from government reforms, which he believes will see a huge increase in people saving for their retirement.

Ahead of his visit, Webb told The Scotsman that the changes, which will see companies automatically having to put their employees into pensions schemes, will mean huge growth in the sector and that can only benefit Edinburgh as an international centre for financial services.

He said: "I wanted to come Edinburgh to see the sector from outside the Westminster bubble. It is hugely impressive in Edinburgh, growing at four times the rate of the Scottish economy and is particularly strong in the pensions market."

Employees will have the ability to opt out of pensions schemes under new laws, but Webb said he intends to appeal to the sector to come up with the right products. "We hope that automatic enrolment will break the inertia many people have in starting to save for their retirement and mean they will then continue to do so," he said.

"But it is vital that the sector, not least in Scotland, responds by coming up with products which encourage people to stay in the schemes."

Webb said that both the government and pension companies needed to help out small and medium-sized employers who will also be forced to enrol their employees into schemes.

"That is why we have set up the National Employment Savings Trust to make sure there is something there for small employers to put the money into," he said.

Webb was clear that the reforms were needed to prevent the taxpayer having to pick up support for millions of people in the future who may end up retiring with no pension.

He said: "We do have a problem down the line. Less than 50 per cent of private sector employees currently save for their retirement and we need to increase that number. Many of these people will retire on modest incomes and will then be dependent on the state pension. We need to encourage more people to save for their retirement."

He also insisted that suggestions unveiled last week by former Labour minister Lord Hutton for public sector pension reform would not drive more people away from taking out pensions.

"There will still be an income related part to their pensions so it will still be more than worthwhile for people to stay in schemes."