The Pension Policy Institute’s recent report on the retirement prospects of the over 50s marks a sobering reminder of the inadequacy of pension policy in the UK. With the obvious answer that we should all pay more in rebutted by the response that nobody has got any money to do so, thoughts will doubtless turn to ways of getting more of what is paid in.
And there are ways DC pension saving can be done better. In this issue Paul Farrow explores how DC can learn from DB. We also look at the charges issue in this month’s Big Question. If AMC and TER do not give the whole picture, and some argue that dealing costs can add 3 per cent to an annual charge, then surely we need to nail the issue. If we do not, the high charges issue will keep coming back, damaging the pensions industry again and again.
The butterfly’s wing of unintended consequences will be felt for years to come, and it seems that we are at the early stages of working through what scenarios will play out
And making DC investments better suit the age risk profile of the individual should also be given more attention, an issue that AllianceBernstein is looking to address.
The industry is also having to face up to the small pots challenge. From my perspective, this feels like a debate that at the beginning of a very long road. The butterfly’s wing of unintended consequences will be felt for years to come, and it seems that we are at the early stages of working through what scenarios will play out. It is fair to say the various parties to the debate are currently a long way apart. This is a consultation that is going to run and run.
John Greenwood
editor, john.greenwood@centaur.co.uk