UK- Employers, the government and the pensions industry need to come up with ideas for promoting occupational pension schemes or face the alternative of taxpayers having to pay an increasing share of pensioners' incomes, according to the Association of Consulting Actuaries.
Speaking at his last ACA dinner before handing over to Gordon Pollock, chairman Mike Arnold criticised the government as being complacent given the number of employers reviewing their pension schemes.
He said data collected by the Association’s members showed fewer than four out of ten final salary schemes remain open to new members and almost half that remain so are reviewing the situation.
He expressed concern at the government’s apparent ambivalence and belief that the levels of pensions coverage are being maintained. He quoted a UK pensions minister as saying the reported fall in pension fund assets during 1999 did not exist.
Figures released today by UBS Global Asset Management suggest the occupational industry has dropped £150bn in the last two years.
“The reality is that the government’s own statistics have reported for some time that an increasing number of people now work for employers who offer no occupational scheme at all.
"By and large, our members are reporting that new or replacement pensions arrangement are generally seeing much lower contributions than are or were going into final salary arrangements,” he said.
Arnold welcomed the review of pensions simplification carried out by Alan Pickering, former chairman of the National Association of Pension Funds. But he said that initiatives including stakeholder pensions and the pension credit are worthwhile but insufficient to encourage the level of pension saving needed for the future.
“Unless we can persuade the public to make quite large changes in how they spend their money and/or make them save more through effective incentives or higher levels of compulsion, tomorrow’s taxpayers are likely to have to find a lot of money to support the growing band of pensioners who will have inadequate incomes in retirement,” he said.
“Coping with a fast-growing grey population is going to be one of the biggest political and social challenges of the next few decades. Imaginative solutions are going to be needed, tinkering around the edges is unlikely to be enough.”