Brits could be allowed to insure their pensions to prevent stock market falls eroding their savings, under new Government proposals.
The announcement comes ahead of the introduction of workplace auto-enrolment in the autumn, amid fears that unless people are assured their money is safe, they will be discouraged from saving.
Pensions minister Steve Webb said he wanted to encourage workers to be able to save for retirement with more certainty about what their pension income is likely to be.
He said: “People don’t really want to work for a year and get a pension statement showing their savings have gone down, not up.
“As part of the options we offer people, we want greater certainty and guarantees or insurance to be on that list.”
Mr Webb added: “Auto-enrolment is our best chance of getting people into saving and if they are put off by fear of risk, volatility and uncertainty, it is very hard to get them back again.
“Now is the time for the pensions industry to look at the market gap in relation to affordable guarantees and provide the products consumers are seeking.”
Official figures released earlier this year show that the proportion of people in a workplace pension has fallen below half for the first time in more than 15 years.
Just 48 per cent of workers were in a scheme, compared with 55 per cent when records began in 1997, according to the Office for National Statistics (ONS).
In addition, research by the National Association of Pension Funds (NAPF) found that 54 per cent of employees were not confident in pensions compared with other saving methods.
Falling stock markets and the Bank of England’s quantitative easing (QE) programme have both eaten into the value of many private pensions, savings and annuities.
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