In a belated response to the Pensions Commission report released in October last year, the Association of Consulting Actuaries (ACA) has called for a higher consolidated State pension, along with later retirement and a stop to contracting out.
ACA says a successful voluntary pension provision is still attainable on grounds of a better basic pension, while enabling greater ‘flexibility’ for private schemes.
The group stresses the need for higher savings and a higher retirement age, adding that higher taxes and/or NI contributions are also an inevitability.
ACA chairman, Adrian Waddingham says: “The other option -allowing pensioners to become relatively less well off compared to the working population - is unacceptable, although this will happen if the government is indecisive in addressing the hard choices raised by the Commission's report.”
It says that a state role in pensions should be limited to poverty prevention, leaving individuals to decide the level of pension income they require, to a degree. ACA says that 'informed choices' is crucial thereby encouraging greater investment by society in financial education.
To this end the group supports the idea of financial education as part of the national curriculum.
ACA supports the idea of phasing out means-tested pensions credit system as it creates a major savings barrier, particularly amongst those on lower incomes and ever more, will affect those on middle incomes.
The ACA proposes various solutions including:
Looking ahead, the ACA believes that the following Pensions Commission report may recommend compulsory private pension contributions, to which it is apposed as it says it would have a 'leveling-down' effect on private pension contributions, particularly from employers.IFAonline
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