The confusing nature of UK pensions is damaging competitiveness and could stymie the recovery from recession, top industry figures warn.
In an interview with IFAonline's sister title, Professional Pensions, Confederation for British Industry head of pensions Neil Carberry pointed to the state of pensions as a "significant barrier" for foreign companies considering investing in the UK.
Carberry says government needed to understand the extent of the problem faced by businesses managing defined benefit scheme costs.
"We need policymakers to understand that DB costs are an issue whether or not the scheme itself remains open. The state of pensions in the UK at the moment represents a significant barrier to foreign investment," he adds.
Independent consultant Ros Altmann said she "100% agreed" and called for a "radical rethink" of pension legislation.
"We have the most complex pensions system in the world by far - almost nobody understands it at all, even the DWP. Even though we've had the simplification, things aren't simple at all - in many ways they've become more complicated."
Pinsent Masons partner and former National Association of Pension Funds chairman Robin Ellison believes the system was unimaginably complicated and the introduction of NEST would make it worse.
He says: "When I qualified there were roughly 30 pages of regulations - now we're nudging 50,000. It's just bizarre, and it's become so complex that most companies just say ‘to hell with it'."
Society of Pensions Consultants council member Kevin LeGrand argued that instability was also a major problem.
He says: "When you've got that complexity combined with such frequent fundamental changes - basically just fiddling and reacting to minor problems - it just magnifies the strain on UK employers as a result."
And he warned of the dangers of creeping complexity in defined contribution legislation. "What we must not do is go down the same route with DC as we did with DB. That's effectively killed DB."
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