UK - SEI is urging Alan Pickering's simplification review to put forward radical changes in the way defined benefit schemes are structured.
SEI senior analyst Andrew Slater argues that pension schemes should be non-contributory for the employee with wages adjusted to take this into account.
And he believes the retirement age will have to be increased so that people are able to accumulate a big enough pension pot.
He said: “The Alan Pickering simplification review may just save the occupational pillar of pension provision which has served the UK so well for many generations, but radicalism is needed.
“Papering over the cracks won’t do. The foundations have to be rebuilt. Defined benefit pension schemes need to be saved. They are an efficient solution for providing quality benefits for the majority of the workforce.”
Slater also called for defined benefit schemes to be changed so that they become career indexed.
He said: “Defined benefit pension schemes of the career indexed type may be preferable to final salary. But have indexing at price - rather than salary - inflation with no guaranteed increases in payment. Such a scheme removes the loss of benefit when employees change jobs.”
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