The Government is living in a “fools’ paradise” if it believes the pensions crisis is going to be solved by simply abandoning means-tested benefits and increasing the state pension, according to the Chartered Institute of Personnel and Development (CIPD).
The comments from Charles Cotton, pensions adviser at the CIPD, come as the Government’s pension commissioner, Adair Turner, is quizzed by MPs sitting on the Parliamentary Work and Pensions Committee.
Cotton called for better communications, education and trust between employers and staff to overcome ignorance and misunderstandings when it came to pension provision.
“If the Government and MPs think that abandoning means-tested benefits for the state pension is going to lead to a stampede of the un-pensioned rushing to join occupational or private pension schemes, then they are living in a fools paradise,” he said.
“Many don’t understand pensions, don’t want to understand pensions, don’t trust pensions, have other spending priorities, and simply don’t believe pensions are for them.
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“CIPD research shows that while nearly nine out of 10 employers tell staff about pensions during their recruitment and induction process, less than half update staff about their pension arrangements on an ongoing basis,” he added.
“Employers are failing to communicate effectively after recruitment, which means that the full value of their rewards package is not appreciated, and yet another opportunity to educate employees about [the] importance of issues such as saving enough for their retirement is being missed,” he said.
