UK pensions labelled unfit for purpose
The UK pension system is ‘not fit for the future’ and in urgent need of reform, a former Government adviser has said.
Commenting on a report titled ‘Pensions – Time for change’, pensions expert Ros Altmann said that the idea of retirement is changing as many people continue to work later-on in life while gradually phasing in retirement.
She also claimed that the Government’s auto-enrolment scheme may be ‘lulling’ millions of employees into a ‘false sense of security’ because current pension products cannot ensure adequate retirement incomes.
The report found that:
- A quarter of adults believe they will not ‘feel old’ until they are in their 80s
- Most people want to work part-time in later life rather than stopping work
- Retirement will become a gradual ‘process’ rather than ‘an event’
- Pension planning will need a more ‘flexible’ approach to mirror this shift – becoming an ‘ongoing process’ rather than a ‘one-off exercise’
Altman also said that current low annuity rates should be prompting savers, pension providers and financial advisers to look at a wider range of investments and retirement solutions.
“Retirement is changing and pensions need to change too,” she said.
“As auto-enrolment ensures millions of people are about to start saving in pension schemes at work, it is important to make future pensions fit future lifestyles. There is a real danger of lulling employees into a false sense of security about their retirement incomes because current pension products are designed for the past, rather than the future.”