UK - A radical defined contribution scheme - which will shun volatile equity markets and invest in infrastructure projects - has been suggested by a think-tank report.
The New Economics Foundation’s report ‘People’s Pensions: New Thinking for the 21st Century’ comes in response to the “growing pensions shortfall” and as an alternative to equities.
Co-author Alan Simpson MP said: “The merit of what is proposed is its simplicity.
“Instead of going into stock market speculation, people could choose to direct their pension savings into infrastructure investment – real cash investing in real assets.”
The “People’s Pension” would aim to:
- Provide a stable environment for private pension investment.
- Answer Britain’s “double dilemma” of a worsening pensions shortfall and public sector investment backlog.
- Re-establish the link between earnings and the state pension.
- Enhance the state second pension so that it would be a fully-funded pension scheme held for the benefit of individuals.
- Provide funds needed to build new schools, hospitals and public transport without the need for public finance initiatives or new government borrowing.
Co-author Richard Murphy – a chartered accountant – said: “We have a pension crisis because we’ve been investing in the wrong things.
“The stock market has absorbed most UK pension investment but less than 15% of that money has been used to create new investment in the UK economy.”
He pointed out that no-one would have to buy a People’s Pension, but those who did would know they had provided for their old age and helped the economy.
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