UK - The UK has successfully addressed three major goals in its pensions provision, according to new research.
‘Policy approaches to promote private and occupational old-age provision in United Kingdom’ is a paper by Edward Whitehouse prepared for the Bertelsmann Foundation as part of a multi-country project examining old-age provision in different nations.
The OECD sets out two main challenges for retirement-income systems: protecting the economic well-being of vulnerable groups during retirement; and diversifying pension provision, particularly between public and private provision. Whitehouse added a third: ensuring the fiscal and financial sustainability of the pension system.
The UK, he says, has been successful at achieving all three goals.
The retirement income system in the UK has long been well diversified. Private pensions cover around 70% of the workforce. The assets of private pension funds in the UK exceed those of the other 14 European Union countries put together.
Nevertheless, there remain significant problems with the UK’s pension system, according to Whitehouse. Mandatory provision has declined - as a corollary of the cutback in Serps - except for the lowest earners.
The retirement savings of the majority are probably less than adequate. In part, this reflects a lack of information about individual pension rights and the complicated regime.
Whitehouse says the government has shied away from the obvious route to improved pension provision - higher compulsory contributions to private pensions - because it sees this as overly authoritarian and worries that mandatory contributions, by reducing current income, will be seen as a tax and will be unpopular.
By Luke Clancy
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