John Lewis points the way on saving

The complexity of the savings and pensions system has long been rightly criticised. Too many means-tested retirement rules, and hoops to jump through to save for a rainy day, has severely dented this countries once healthy savings culture.

The pensions secretary, Iain Duncan Smith, is today announcing steps to reduce complexity in the pensions system and start the process toward a universal pension which surely is a much needed change.

There is little doubt that many - particularly young people - are left confused and demotivated to save. This will hit them hard in later life. So it was with interest that I saw the announcement by John Lewis that the high-street chain is to offer a 5-year bond to its customers.  The fixed rate retail bond will allow savers to invest a lump sum of between £1,000 and £10,000, and will be available to 1.5m John Lewis cardholders as well as 70,000 staff. It offers a fixed annual return of 4.5 per cent, while a further 2 per cent will be paid in John Lewis gift vouchers.

With interest rates at a record low of 0.5 per cent this looks to be a great deal with an added incentive, even though the bond is for 5 years, of an annual 'cash' return in the form of vouchers. It is a simple idea, built on the John Lewis reputation and trust for the brand, that I think should be applauded.

If we are to get more people saving - to reduce the future burden on those like me who do make an effort to save - ideas like this must surely be embraced by the government and held up as good examples.