Letter: Limits to personal pensions (CORRECTED)

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Sir: Andrew Dilnot and Paul Johnson have provided a welcome contribution to the continuing debate over the future of pension provision with their examination of the recommendations on pensions produced by the Social Justice Commission (Comment, 27 October). However, I would disagree with one particular element of their analysis.

In discussing the current and future spread of pension provision (above and beyond a state or minimum pension), they seem to be arguing that proper regulation is all that is required to make personal pensions an acceptable vehicle for an additional pension for those ineligible for an occupational scheme.

High management charges and commission, together with the lack of a guaranteed income and comparatively high levels of risk, make personal pensions unsuitable for those over a certain age and below a certain level of income. Personal pensions also suffer the obvious disadvantage that, in most cases, employers make no contribution.

Personal pensions do have a valuable role to play. But over-reliance on personal pensions in the national pensions strategy should be avoided by extending the number of employees who receive a contribution from their employer, whether this is through a traditional defined-benefits scheme or money-purchase scheme linked to one employer, or through the extension of industry-wide pension schemes.

Yours sincerely, JOHN DENHAM MP for Southampton Itchen (Lab) House of Commons London, SW1 27 October