Companies are at risk of being unable to deliver on increasingly unaffordable pension schemes, according to new chairman of the UK's National Association of Pension Funds (NAPF), Peter Thompson.
Speaking to International Pensions News at the NAPF conference in Birmingham, Thompson said that a greater life expectancy, the reduction of long term interest rates, and equity performance over the last 25 years have had a detrimental effect on the affordability of pension schemes.
He added that raising the existing UK retirement age beyond the 65 years may not be the best solution, since employees could not be forced to comply with this: “We need to look at a broader definition of the word retirement, with the view of giving employees greater flexibility.” Thompson - a partner at global consultant William M Mercer - also said that companies needed to be aware of the increasing costs of defined contribution schemes, and that younger generations may have to rethink plans about working until 65 if they want to secure a comfortable retirement.
He told IPN that the NAPF should create a greater awareness on life expectancy issues amongst bodies including the UK government, the Association of British Insurers (ABI), the Association of Consulting Actuaries (ACA), and other employer-forums. By Janet Du Chenne
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