Is Fiduciary Management Beneficial & is Today’s Pensions System Sustainable?
Richard Butcher, Managing Director, Pitmans Trustees, offers his reflections on Steve Webb’s announcement on flat-rate state pension schemes and also looks back on the first six months of auto-enrolment.
Finance IQ: Hello and welcome to this IQPC podcast presented by Finance IQ in conjunction with the 2nd Annual Fiduciary Management Summit due to take place in April in London. I’m your host, Helen Winsor, and today I’m joined by Richard Butcher. Richard is the Managing Director for Pitmans Trustees. One of his colleagues, Melanie Cusack, will be speaking at our event. Richard, welcome to the show today; how are you?
R Butcher: I’m well, thank you very much.
Finance IQ: Thanks very much for joining us. Now, I’ve got several questions for you today. First of all, what do you make of Steve Webb’s announcement on flat-rate state pension schemes; that people will now have to make 35 years worth of National Insurance contributions to be eligible? What will happen to people who can’t actually do this?
R Butcher: Let’s deal with the last bit of that first because it’s fairly straightforward. If somebody can’t complete 35 years worth of service, they’ll have a pro rata amount. If they complete 30 years, they’ll get 30/35ths of the full flat-rate state pension. That’s a system that we’ve adopted for a great many years on the basic state pension, so it’s well accepted.
What do I make of the announcement?
And secondly, complexity bamboozles the public. They’ve absolutely no idea what level of state pension they’re going to get, so it’s very difficult for them to plan what level of private pension provision they need to top it up to an adequate retirement income. With the clarity that the flat-rate state pension will bring will allow people to meaningfully plan. They’ll be able to see quite clearly what the state will pay them and then it’s up to them to decide how much they save towards an adequate retirement income.
Finance IQ: Thank you. So that’s really great to sum that up. We are now nearly six months into auto-enrolment – another system. What do you think are public perceptions of it and do you think it’s sustainable?
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Page Updated Last on: Mar 01, 2013