Pensions and savings forced up election agenda

Interactive Investor has made a bid to force the pensions and savings debate higher up the agenda for the general election.

With less than three weeks until Britain takes to the polls to elect a government, the financial service provider expressed its surprise that the opposition parties have not been making more of the perceived savings crisis.

Interactive Investor pointed out that, since New Labour came to power, the UK savings ratio has "plummeted" and a "major pensions crisis" has taken root.

Britons currently save £57 billion a year too little for their future, the Turner Commission has said, which could see pensioners 30 per cent less well off in future. This would be the first time pensioners have become less well off in the UK, Interactive Investor pointed out.

Additionally, one person in two approaching retirement is not contributing to a pension, according to research last week by Mintel.

And while people are failing to prepare for retirement consumer debt has broken the £1 trillion barrier for the first time.

"Given its record, it is not at all surprising that the Government wants to gloss over the problems, as indeed they have attempted to do in their election manifesto published this week," said Tomas Carruthers, Interactive Investor chief executive.

"And by deferring to the Pension Commission, timed to report after the election, they have a convenient method of sweeping the crisis under the election carpet," he added.

But while a lack of comment from the Labour Party is understandable, the silence of the opposition parties has surprised Mr Carruthers.

He asserted: "An almost complete lack of public attack on this record by the main opposition parties is not only surprising, it is not good for the electorate or indeed the democratic process in this country.

"Solving the savings crisis and controlling the escalating personal debt issue in the UK may well be a complex challenge, but this is not an excuse to isolate it from the pre-election debate. Pushing it to the back of their manifestos and leaving the issues un-debated before polling day does no one any good at all - except of course the current Government who would prefer us to believe there is no crisis."

Interactive Investor accepts that the Labour Party is not wholly to blame for the problems in the savings and pensions industries, but highlights policies in pensions and savings that it believes have not helped.

"Taking £5 billion a year out of UK pension funds has seriously deepened the pensions crisis. And reducing tax incentives to save outside pensions by slicing £5,000 a year off the amount that can be sheltered from tax in an ISA (in place of PEPs and Tessas) has seen the UK savings ratio halved, from 11.6 per cent a year in 1992 to 5.6 per cent in 2004," the company said.

To try and get to the bottom of the issue, Interactive Investor has contacted the three main UK parties and invited a representative from each to put their plans up against their those of their political rivals, the press, and industry representatives.