Jeff Salway: Plight of millions of savers is ignored by all party manifestos

IF YET more proof were needed that politicians are woefully out of touch with the needs of the electorate, it was the absence in their election manifestos of ideas targeted at the UK's escalating savings crisis.

Not one manifesto from the main three UK parties offered any suggestions as to what they would do to improve the lot of savers and pensioners – a very substantial chunk of the voting population. Gesture politics are de rigueur at election time, but there was nothing targeted at the millions struggling to compensate for the lack of interest paid by savings accounts.

For pensioners in particular, this is an issue of the utmost urgency. For more than 18 months, those who relied heavily on interest from their savings for income have been forced to eat into those savings, with many sinking below the poverty line as a direct result. There has been no recognition of this, even though millions of voters are desperately seeking some response to their predicament. Virtually all the savings and pensions proposals that did feature in the manifestos merely restated existing legislation or policies.

Even when it comes to the biggest single challenge facing the next government – the mountainous deficit – there was relatively little detail regarding who will be expected to pick up the tab.

Labour and the Conservatives in particular devoted tiny portions of their manifestos to savings, pensions and other matters of personal finance, which is at odds with the importance of addressing the issues that affect all of us. From state pensions and the retirement age to workplace pensions and longer-term initiatives focused on the savings crisis, we are talking about issues that are fundamental to the future financial health of the UK.

Yet none of the main parties offers proposals for tackling the savings crisis beyond a selection of piecemeal policies that amount to little more than a superficial paint-job. The respective manifestos reinforce the expectation that the next administration will carry on where the last left off in failing to knit together a consistent approach to pensions policy.

Friends Provident chief Trevor Matthews is calling for the next government to draw the politics out of pensions, starting by creating an independent body of professionals responsible for developing a long-term savings strategy.

As Matthews rightly argues, people need reassurance that their savings contributions will be protected, and a government that changes its pensions minister almost annually and moves the pensions goalposts with equal regularity cannot provide that.

Aegon presented a similar argument in its pensions manifesto this week, calling for policymakers to take a step back and look at the bigger savings and retirement picture. It points out that there will be about 280,000 centenarians in the UK in 2050, compared with 12,000 today. This is part of a profound demographic shift that will cost the country 300 billion by 2025 because of the rising cost of healthcare, pensions and other benefits.

This is more than the state currently spends on health, education, defence and public order combined, and around double the total take from income tax, currently 146bn.

And of course, it's a cost that will be met by a shrinking working age population, as the baby boomers retire and the "old age support ratio" increases. The tax rises we face in the coming years may be dwarfed by those we may see if co-ordinated action isn't taken quickly to reform the pensions system and the UK savings culture. Put the challenge in that long-term context – the one in which it must be viewed – and it is even clearer that our politicians have neither the appetite nor the ideas with which to tackle it.

For a while, it seemed that the National Employment Savings Trust – the government's flagship workplace pensions initiative, coming into force from 2012 – offered the kind of big- picture solution necessary. Yet while its auto-enrolment element surely points the way forward, the scheme has been undermined by the detail, from charges and contribution levels to employer communication and implementation stages.

The Tories have talked about ditching it altogether, with threats that amount to little more than throwing their toys out of their pram.

And, as all their manifestos confirmed, that typifies the quality of the political debate when it comes to tackling the long-term savings crisis.