UK - Industrywide schemes must be encouraged by the government if it is to develop a fair, cost-effective and sustainable pensions system, the Consumers' Association claims.
The association believes that the current mix of state, private and occupational provision is a “mess” and that a radical overhaul is needed. As a start, the CA believes that the personal pensions market must be rationalised, and that until it does so, it will not be efficient.
The association argues this situation has allowed weak corporate governance, integrity and accountability to flourish in the sector, as firms put shareholders’ interests above customers.
To replace the vast array of pension providers, the CA argues that the government should encourage the development of industrywide schemes based on the Dutch model or the UK-based B&CE Benefit stakeholder scheme.
These will provide the economies of scale and “financial muscle” to deliver pensions cost-effectively, the CA argues. CA principal policy adviser Mick McAteer said: “Government has a duty to make the City work in the national economic interest.”
Occupational pension provision has continued to grow in value, but there remains large variance in incomes across the pensioner age group, according to latest government data.
Defined benefit (DB) schemes could have an aggregate surplus by 2021 under Pension Protection Fund (PPF) projections, its strategic plan for 2018 to 2021 reveals.
Investment consultants are failing to recommend products that outperform net of fees, the Competition and Markets Authority (CMA) has said as its investigation into the market continues.
This week's top stories included coverage of the much-anticipated defined benefit (DB) white paper and the sector's reaction.