People 'must save more for their retirement'

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Indy Politics

People will have to take responsibility for providing for their own retirement rather than relying on the state, the Government will say today.

John Hutton, in his first major speech since becoming Secretary of State for Work and Pensions, will announce the five tests by which the Government will judge the pensions blueprint to be published next Wednesday by a commission chaired by Lord Turner of Ecchinswell, the former Confederation Britisg Industry director general.

Mr Hutton will say: "The primary responsibility for security in old age has to rest with the individual and their families.

"An active welfare state must provide a floor below which no one should be allowed to fall, but its primary role must be to enable people to provide for themselves, giving everyone the opportunity to build a decent retirement income that meets their needs and expectations."

Although he will say the Government must ensure this long-term change, it will not rush to judgement on the Turner report, which is expected to recommend defusing the pensions timebomb by a combination of raising the retirement age from 65 to 67, ensuring people save more for their retirement and raising taxes. Next spring, Mr Hutton plans to issue a White Paper setting out the Government's proposals.

He will tell the Institute of Public Policy Research think-tank today: " The Government will approach this debate with a genuinely open mind. I hope everyone - [in] the pensions industry, business, unions, individuals or political parties - will do the same."

Mr Hutton will add: "If we are to achieve a lasting pensions settlement for the 21st century, I believe that ultimately our long-term package of measures has got to meet five key tests: does it promote personal responsibility, and is it fair, affordable, simple and sustainable?"

He told MPs yesterday that the means-test approach, favoured by the Chancellor, Gordon Brown, was likely to remain a feature after the overhaul of the system.

Since 1997, Labour has used means-testing to target cash at the poorest old people, with the pension credit guarantee providing them with up to £27 on top of the weekly £82 basic state pension. "I think we will continue to need a policy that supports the poorest pensioners," he said.

Promising to kick-start a national debate on the future of pensions, Mr Hutton added: "Now that the Turner report is imminent, we will need to step up a couple of gears in engaging the country with some of the tough choices we may need to face if we want to ensure our pension system remains viable and efficient."

Mr Hutton told the Work and Pensions Select Committee that the troubled Child Support Agency (CSA) may be given new powers to ensure absent parents make a proper financial contribution to the upkeep of their children.

He said he had told the CSA to develop "a much stronger enforcement function", adding: "People in this country have to obey the law and that means parents who are not living with their children should pay for their kids."

Mr Hutton said: "There are a lot of fathers out there who don't want to pay maintenance for their kids and they will do anything to avoid paying it. We shouldn't pussyfoot around this. That is the problem."

He will unveil a shake-up of the CSA, probably in January, but told the committee: "I really don't believe there is any magic wand that simultaneously sorts out the backlog of claims and the efficiency of the system and sorts everything out for the future."