Aviva has challenged the National Employment Savings Trust (Nest) over its assessment on the extent of how means-tested benefits interact with auto-enrolment.
Nest assistant director of market and member engagement Paul Gilbody told Corporate Adviser Summit delegates last week that a “minority” of people will be adversely affected by means-testing.
But Paul Goodwin, head of pensions marketing at Aviva, said the numbers affected would be significant, given 6m people are already on pension credit and argued the issue needs to be resolved once and for all to prevent a media and public backlash that could result in mass opt-outs.
Gilbody said: “I don’t have the figure to hand but the means-testing issue will affect a small number of people. It is not the majority of people – we are not talking 70 or 80 or 90 per cent of the people who are going to be enrolled in Nest”.
“The number of people who have a means-testing issue affect is a smaller number than those that won’t. At the end of the day, if you want to try and encourage people who don’t have access to work-based pensions, people who don’t have access to savings, to start saving for their retirement then you need to do something wholesale like this and I don’t buy the argument that people in Nest will have a means-testing problem. You are talking about a minority of people.”
Goodwin said: “If the Nest target market is somewhere between 6m and 9m people, depending on the figures, we’ve currently got about 6m people qualifying for pensions credit, so I think there is a fairly good match between the two. And we’ve got 1.8m out of those 6m that don’t actually apply for it. So I just take issue with Paul’s point. I think means-testing is a major issue.”
“I think it is a major issue that the press will get hold of, and so we do need to do a really good publicity job on making sure that consumers understand that there is some benefit in saving and we are going to have to be able to prove that there is a benefit in savings to be able to do that,” he added.
A 2009 DWP report into personal accounts concluded that around 95 per cent of people in the scheme would end up getting out more than they put in.