NAPF says UK occupational schemes not safe
UK – The chief executive of the National Association of Pension Funds says occupational pension schemes in the UK are not ‘cast-iron’ safe – and that workers’ confidence in employers is amazing.
“Everybody thinks they’re cast-iron safe,” Christine Farnish said of occupational schemes. “Of course they’re not.”
“Amazingly, most of them still have confidence in their employer,” she added, referring to data which shows that 75% of workers still trust their employers on pensions provision.
The NAPF’s stated mission is to promote workplace pensions and encourage “the provision and take up of employer-sponsored pensions”.
She told a conference organised by the Economist that the UK has “huge problems” in the second-pillar, part of a pension system which she argued was “probably the most complicated in the world”.
She was critical of successive governments’ “knee-jerk reactions” and “excessive regulation”, adding that the UK’s pension system is outdated.
She said there was a “question mark” over the affordability of the system and that the whole issue could hit economic productivity. She said the government “should be worried about” this.
Farnish said the proposed Pension Protection Fund would introduce “huge uncertainty” in terms of costs. “And with that goes risk.”
She said it was not clear whether the new European pension directive, Institutions for the Occupational Retirement Provision, would make a difference. Forcing schemes to be fully funded was “quite a tough call”.
“It’s not helping us here in the UK to maintain defined benefit schemes,” she said.