Whether or not the UK pension system is going through a crisis may be debatable, but how to tackle t...
Whether or not the UK pension system is going through a crisis may be debatable, but how to tackle the current issues facing pensions was the running theme of the NAPF annual conference in Glasgow last week.
Among the people airing concerns about the pensions was the ABI's head of pensions and savings Joanne Seagars, who said some 3 million people in the UK are seriously lacking in savings, with an additional 10 million potentially lacking beneficial savings.
Adding to that bleak note, NAPF chief executive, Christine Farnish said that "The UK pension system is under severe stress".
At the top of the conference agenda, and charged as one of the main scapegoats for the crisis, is the closure of many final salary schemes, forcing new employees into defined contribution schemes.
Speaking first on that issue, Peter Jay, former economics editor at the BBC, said the current system of occupational pensions provision needed to change dramatically if the pension "crisis" was to be solved as "a pension is an essential ingredient of man's career upon earth."
Outlining how pensions have gone from being a "dry" topic to something widely discussed by media, politicians and people included, Jay said he believed private pensions had been greatly undermined.
However, he added that this is not the result of an aging population, or of recent years' bear markets, but a direct result of trustees' discretion to make investment decisions to match scheme liabilities, and the lack of advice they have been giving to clients.
"The promise of a pension can only be squared if equities outperform bonds. But every schoolboy knows this is not possible. If the schoolboy knows this, why don't actuaries and trustees?" he said.
This is something that needs to be worked on, Jay said, adding that workplace related pensions were the best means to get people to save more.
Meanwhile, the NAPF's incoming benefits council chairman Rhoslyn Roberts attacked the government for just "tinkering" with current legislation instead of introducing radical government reforms to address the issues facing UK pensions.
Roberts said she believed the government needed to introduce reforms so that firms could operate schemes best suited for both their members and employers, adding that to encourage savings the income from private pensions should have no bearing on means-tested benefits.
"Fairness to all" is the key, Roberts said, adding that the NAPF is neither pro- nor anti-fat cats, but rather "pro thin cats".
OPAS' chief executive Malcolm MacLean also attacked the government's reforms, saying that a flow of scheme closures is inevitable because the government is ignoring the current crisis.
"The government has to grasp the responsibility here," he said.
Talking about the "crisis" as divided into two areas - a savings crisis and a confidence crisis -MacLean warned that the latter was beginning to affect the former.
There needed to be a radical overhaul of funding and wind-up rules to help employers keep DB schemes open, he said.
He added that the government should also offer additional tax incentives to encourage employers to continue to run schemes, in order to help diminish the crisis.
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