Field was also dismissive of the attitude of the financial sector, which was bleating that its practicioners couldn't make a living if fees were capped at 1%. As he pointed out, it will be 1% of the total sum under management, hopefully a not inconsiderable sum. Many companies have been reluctant to move forward on these new schemes, a fact he attributed to the wish of many players not to get stuck with another pension mis-selling scandal.
An issue closely related to pensions is annuities. Here we found him taking a surprisingly free market stance. His view is that the Government has no right to tell people how to manage their own affairs, and how much and when they should be obliged to buy an annuity, or "annuitise", as he calls it. He referred to the Irish model where, as I understand it, you are not obliged to buy an annuity unless you have a capital sum above a certain threshold. Although he talked of the possibility of changes to annuities being made in the Finance Act when it comes back from the report stage, in reality that seems unlikely.
Ideally he would like to see pension savers only forced to take out an annuity to cover the annual minimum income guarantee of £4,079. That would ensure that those people wouldn't have to rely on the heavily stretched benefits system to fund their retirement. This is the main aim of the Government. Anything else in the pension pot could be used as the individual sees fit.
On the issue of changes in the official retirement age, Field was quite adamant that this would happen. As he pointed out, when Lloyd George introduced pensions in 1908 they were only for people over 70, and yet average life expectancy then was 48. His other comment on the genesis of the structure was that it was based on tax and not on insurance. Once that was entrenched in the system it became impossible to move it to an insurance-type structure.
However, the need for adequate pension provision is underlined by the fact that "only 1%" qualify for full company pension schemes. Although neither of us thought to ask what that was 1% of...
The state pension for a single person is currently paid to everyone over the age of 65, irrespective of whether they need it. In this respect, it is similar to Family Allowance. Although this is laudable it does make it very expensive. We asked Mr Field whether he thought it might become means-tested in the future. His view was that it was being allowed to wither anyway, so the cost would gradually decrease. But in addition to that, he thought it likely that over time the use of tax credits would achieve the same effect.
In summary, we came away very impressed with the scope of his knowledge and understanding of the problem, but a little bit depressed about the scale of the problem and how it might be realistically tackled. In his mind, the single largest problem is how to persuade people at the lower end of the income scale to save when the MIG currently makes it totally uneconomic for them to do so.
