‘Safety net rather than a straitjacket’: Pension providers question Labour guaranteed income plan

Pension providers have questioned whether the government can deliver on its plans to guarantee retirement income for millions of private sector workers. Pensions minister Torsten Bell unveiled plans on Tuesday which will require pension providers to offer workers an annual income as standard in retirement. Dubbed ‘Guided Retirement’, the overhaul is anticipated to bring private sector retirement savings closer to that of public workers, who typically have Defined Benefit schemes. DB schemes guarantee employees a regular, lifetime income upon retirement calculated by length of employment and salary. This differs to private defined contribution (DC) schemes where a worker’s retirement fund is built entirely from money paid by them, their employer and tax relief, which creates the risk of people not having enough money upon entering retirement. While pension providers have welcomed the possibility of improved retirement savings and the removal of having to deal with diffic