ALMOST TWO THIRDS OF WORKERS BELIEVE MEANS-TESTED BENEFITS DETER PENSION SAVING
A recent survey conducted by employee benefits provider B&CE Benefit Schemes, concludes that 62% of UK workers believe that means tested benefits deter some people from saving in a pension. Seven out of ten workers aged over fifty-five feel that means-tested benefits could deter people from saving. This statistic is particularly concerning as this is traditionally the group you would most expect to be saving for their retirement. A large majority of workers also felt that topping up the basic pension with means tested benefits is unfair on those who have paid money into a pension scheme. Twice as many felt that it was unfair as think it is fair (59% and 29% respectively).
John Jory, deputy chief executive, B&CE, said: “It is not surprising to see that workers feel that topping up a pension with means-tested benefits is unfair on those who save and a deterrent to those who might; what is concerning is that it is such a large number.
“If through unforeseen circumstances someone who saves ends up saving less for their retirement than intended then the small pension pot they arrive at their retirement with may disqualify them from claiming means tested benefits. This possible scenario does not send out the right message to someone in their twenties or thirties who is considering whether or not is worth their starting to save for their retirement.
“If we are to encourage more people to prepare financially for their old age, then it is essential that those who save in a pension are demonstrably better off at retirement than those who do not.”
As well as the basic state pension there are other benefits that retired people can receive from the State, but these are means tested so they are only available to people whose income and savings are below certain levels.