To save, or not to save!

For years, the pensions, savings and wealth management industry laboured under the shadow of means-testing. Put simply for those on modest incomes, there was always an argument that it was better not to save in a pension.

The minimum income guarantee was a huge disincentive and while this was improved by the pension credit, it still penalised the thrifty.

Someone on a modest income could save in a pension, their neighbour might not and yet when both retired the saver could find themselves on the same money as the spender, as means-testing bit into their savings.

Whether it is ever wise to rely on the state is of course a different point altogether and one many IFAs have made over the years when outlining the risks of not saving.

However the overall effect was that some people didn’t save and advisers and pension companies showed some reluctance to deal with those on low incomes. For marketers, the message was complicated and full of caveats.

Now if we are to believe reports in the press, two Government departments, the pensions department and the really important one, the Treasury, want to create a more generous flat rate pension of around £140, not the current system of a basic state pension topped up with means-tested benefits.

It might even be announced in next week’s budget.

The message for marketers, pension companies and advisers should become much clearer. Not quite the holy grail, but something quite shiny and exciting.

We may soon be able to tell people, if you save you’ll definitely have more money to spend in your retirement than your feckless next door neighbour.

Or more simply, it definitely pays to put money in a pension.