Melanie Bien: Pension reform? We'll die waiting

Another week over and still no more details of the reforms to UK pension law for which we've been waiting so long. And the longer the Government drags it out, the worse the situation gets.

Another week over and still no more details of the reforms to UK pension law for which we've been waiting so long. And the longer the Government drags it out, the worse the situation gets.

Research out last week from the Association of British Insurers reveals that over one-third of working people face a retirement crisis because they are not saving enough. And 80 per cent of those are not saving anything at all.

In the same week, the National Consumer Council released research revealing that most under-35s don't have a nest egg and face a tough middle-age as they work to catch up on the saving they didn't do in their twenties and early thirties.

Increased personal debt is playing a part in this. It makes sense to start saving only once you've paid off your borrowings, as debt is very costly. And if interest rates do rise, as many are predicting (page 11), today's young will spend a long time trying to get out of the red before they can start saving for retirement.

Even without this extra debt burden, young people on low incomes struggle to save - it's a fact of life. The trick is persuading them to make short-term sacrifices in order to find the cash from somewhere to put into a pension for their retirement.

But why would you make a sacrifice today in order to save for tomorrow when there are no guarantees of what you'll get in the end? The pensions crisis - the mis-selling scandals and the poor investment returns - has had a damaging impact, making people so wary that they are buying property instead (see page 10).

So what is the answer? A lead from the Government is crucial, and this dilly-dallying over pensions reform is only making matters worse. The Green Paper published nearly a year ago explained the importance of better information and promotion of pensions. The consultation process ran until the end of March but still little has happened. Many people remain bewildered and confused about the choices available.

A simpler and more stable state pension structure is a matter of urgency. It might be impractical to raise the state pension to a decent level, but if this is the case then we should be told so clearly.

There also needs to be a rethink of the whole issue of means testing, which has not been well received where it has been used in calculating entitlement to the Pension Credit. It is seen as a huge discouragement, particularly as it is already affecting the many rather than the few.

Who wants to save all their life, make sacrifices along the way, and then be penalised for doing this when they retire?

Independent Partners: 10 top tips for retirement. Get your free guide here

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