The industry is divided down the middle on whether the latest overhaul will strengthen or weaken the UK pension system, PP research finds.
Pensions Buzz respondents were split on the question of whether the major changes introduced in the Budget will help or hinder the UK pension system.
Authors of an international study have suggested the changes could have a damaging effect (PP Online, 13 October – www.professionalpensions.com/2375271) and it is clear that some in the industry share these concerns.
While 39% of respondents rejected the claim, 38% agreed that the UK system would suffer as a result of its latest overhaul.
Critics of the changes said they were hastily drawn up, and weakened the system by moving away from retirement income in favour of simple saving vehicles.
“The changes are good in theory but the implications have not been thought through,” said one critic.
“People will underestimate how long they will live and not keep enough funds for later in retirement, thus putting more strain on the state,” another respondent added.
“The race to the bottom continues at a staggering pace,” observed one commentator.
“I can’t help wondering where this measure came from, bearing in mind the current state of the market.”
But the measures had an equal amount of backers. One supporter said: “The changes will boost saving for retirement, and most members will use their options responsibly.”
Several respondents suggested the move was good news for savers, but bad news for many of the “vested interests” in the pensions industry.
“The change was necessary as the current set up was hardly an endorsement for encouraging people to save for their retirement,” said one contributor.
“I believe that it is up to financial institutions to design innovative products that will fit the new legislation rather than bleating about the death of the annuity market.”
There were also plenty of respondents who said it was too early to say. One contributor explained: “It will be positive if people save more; negative if people try to manage their fund to zero at death, as members will incorrectly estimate how long they will live and what inflation will be.”
To see all the results of this week’s Pensions Buzz survey, visit:
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