UK - The UK private pension system is "not fit for purpose" and "hugely inefficient", research by the Royal Society for the encouragement of Arts, Manufactures and Commerce finds.
A report by the social lobbying group - Building the consensus for a People's Pensions in Britain - written by Hermes Focus Asset Management chairman and leading scheme manager David Pitt Watson, found up to 40% of UK pensions are being swallowed by charges.
And it found if a typical Dutch and British person saved the same amount for their pension, the Dutch person would receive a 50% higher income in retirement.
Pitt Watson (pictured) said: "By common consent, the UK private pensions system is not fit for purpose. It is hugely inefficient.
"The government has established NEST, and loaned it hundreds of millions of taxpayer money, but has then prevented it from competing by restricting the size of contribution it can take. The danger is that we are creating a weakened monopoly rather than healthy competition."
Pitt Watson's report suggested a "best practice" low cost system achieved through a limited number of large suppliers and collective schemes where there is no need to administer and report individual performance.
However, Pitt Watson said the Pension Schemes Act 1993 should be clarified to enable collective DC pensions - similar to those in the Netherlands and Denmark and offering up to 39% higher pension returns - to become available in the UK.
The RSA has also written to pensions minister Steve Webb and other industry stakeholders calling for the creation of a limited number of private sector providers to be "approved default providers" like NEST.
The report called on the government to build a broad cross party consensus in which political parties, employers, unions, and pension funds agree to implement a ‘pensions architecture' that brings the UK in line with countries such as Holland and Denmark that enjoy the lowest levels of pensioner poverty in Europe.
This week's edition of Professional Pensions is out now.
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