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Catch up with the latest press releases from LV=

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LV= responds to DWP consultation on A State Pension for the 21st Century

Press release: 29/06/2011

Following LV='s official submission to the Department for Work and Pensions’ consultation on state pension reform, Ray Chinn, LV= head of pensions, comments: "It's been widely debated that the state pension needs updating. In its current form it is too complex and the wide use of means tested benefits is a disincentive for many people to independently save for retirement."

LV='s main concerns with the current system are:

  • Complexity - the system is overly complex and the resulting confusion acts as a barrier for people to save for their retirement.

  • Means testing – at the very least in the short to medium term there is, in our opinion, an over reliance on means tested benefits.

  • Equality – there are historic inequalities that will take years to work themselves out of the system.

Ray Chinn continued: "While it would be an improvement on the current pensions system we do not believe the option of speeding up the move to a flat rate state second pension is the answer. A lot of the issues we see with the current system would still remain. There would still be a great degree of complexity as a two-tier benefit system would still exist. For example, each tier would have different rules governing the number of years benefits are built up over, and how they would increase in payment."

"While we accept that there will always be winners and losers when changes are made, we believe that the option of a single-tier state pension would be the fairest solution. We need a system where people can be confident that they will benefit if they have saved or made other plans to fund their retirement above and beyond what they will receive from the state. Means tested benefits should then only be used as a safety net aimed solely to assist the poorest, most vulnerable pensioners. By making the system as straightforward as possible it will allow people to make better decisions about pension savings and plan for the future with confidence."

LV='s own research[1] showed that 25% of those within a year of retirement said they have no personal pension or retirement savings. Of those that will retire within 12 months that have saved into a pension, nearly a third (31%) have no idea or only a rough idea how much their pension pot is worth, and 14% have reduced the amount they are putting away for retirement by more than £300 per month on average.

Ray Chinn concluded: "It's worrying that so many people so close to retiring have no idea what their income will look like, or simply have too little savings to rely on anything other than the state. A simpler state pension that doesn't means test could help start to change this."


Notes

1 All figures are taken from omnibus research carried out by Opinium Research on behalf of LV= as part of the State of Retirement Report. An online poll of 1,541 British adults, all aged over 50, was carried out from 5 – 9 May 2011

LV= is a registered trademark of Liverpool Victoria Friendly Society Limited (LVFS) and a trading style of the Liverpool Victoria group of companies.

LV= employs around 4,500 people, serves over four million customers and members, and manages around £8.0bn (as at 31 December 2010) on their behalf, via LV= Asset Management (LVAM). We are also the UK's largest friendly society and a leading mutual financial services provider.

LVFS is authorised and regulated by the Financial Services Authority, register number 110035. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF. www.LV.com.