The government needs to introduce compulsory pensions for BOTH employers and workers if the UK is to...
The government needs to introduce compulsory pensions for BOTH employers and workers if the UK is to bridge its £27bn pension gap, Datamonitor says.
In a report released today, Datamonitor argues for the necessity to introduce compulsory pensions as the government's attempt to diminish the shortfall, in the amount being saved, has so far has been fruitless.
Accusing the government of neglecting and tackling the "affordability" issue, Datamonitor believes the key reason for the lack of pensions saving is that many consumers have little or no cash to spare.
This comes as increasing evidence suggests a large sector of consumers - particularly low income earners, women and graduates - are failing to contribute to a pension and relying too heavily on state support, says Liz Hartley, financial analyst at Datamonitor.
If the government is to introduce compulsion, Datamonitor suggests that it should begin with employer compulsion, followed by worker compulsion later on.
That said, not all employees or employers should be included in the system, suggests Datamonitor, as those workers on the lowest incomes would be better off relying on state support, and the same goes for small employers or new business start-ups.
Part-time and temporary workers should, however, be included in the compulsory scheme, deems Datamonitor, especially as many working mothers belongs to this group, who would greatly benefit from a larger retirement provision.
In the meantime, pensions should be redesigned to offer low-earner consumers a greater level of security, using a more diverse mixture of assets such as property or cash, Datamonitor says.
And "no frills" occupational pensions - giving consumers greater protection from stock market losses but permitting flexible withdrawals - should also be introduced to guarantee consumers a satisfactory standard of living when they retire.
The report 'Plugging the Pensions Gap: Options for change in 2003' is available through Datamonitor and costs £3,215
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