Pensions proposals a 'trap'

OTTO Thoresen, boss of insurance firm Aegon UK, will today warn the government against the "trap" of taking a piecemeal approach to pensions.

Thoresen, who is due to speak at a fringe event at the Liberal Democrat party conference, will say the coalition must re-examine tax-breaks on pensions and savings. He will also argue that changes to the way financial advice is given under new rules due in 2012 threatens to limit access to advice to fewer people.

Aegon has welcomed coalition government moves to restrict higher rate tax relief, as well as plans for automatic enrollment in pension schemes for all UK employees by 2012.

But Thoresen will say coalition proposals to rip up compulsory annutisation and extending the default retirement age past 65 "risk falling into the same trap as the previous government by perpetuating a piecemeal approach to pension legislation".

He will argue that government changes give "people the impression that the goalposts can be constantly moved" and undermine saving.

Thoresen said: "The UK faces huge challenges in dealing with the demands of an ageing population and creating the groundwork for a sustainable savings culture. The coalition government and the wider population are showing increasing appetite to tackle these challenges, but we must go about it in the right way.

"We have a unique opportunity to make a real difference to people's financial security. But we can only do this by ending our piecemeal approach to savings legislation.

"We must take a fresh look at what financial incentives and behavioural aspects encourage people to save, and make sure good financial advice is there for everyone who needs it."

Thoresen lent his name to a review of financial advice, commissioned by the Labour government in 2007, which called for a free national financial advice service.