UK government under pressure to simplify pensions
UK- Actuaries in the UK have urged the government to simplify private pensions in order to encourage more individuals to save for their retirement. In its submission to the department for Work and Pensions’ review on simplifying private pensions, the actuarial profession says excessively complicated legislation is proving a disincentive to save.
The Faculty of Actuaries in Edinburgh and the Institute of Actuaries in London maintain a radical approach is required and that additional legislation will only complicate matters further.
Chairman of the pensions board’s legislative committee Gordon Sharp says: “past attempts to achieve simplification have foundered because the cumulative effect of well-intentioned measures has been to build up layers of rules and this has resulted in the labyrinthine regulations in place today.”
Consultant William M Mercer has meanwhile gone a step further and urged the government to undertake a complete overhaul. Its submission says the government should not be afraid of reform even at the expense of choice and the loss of some protection of benefits.
Deborah Cooper, Senior Consultant and co-author of Mercer’s response says over-regulation is strangling the occupational pension sector, and radical reform is needed urgently.
"The regulation of pension schemes has lost its way. Successive governments have built layer upon layer of regulation, creating an intolerable burden for pension schemes. Some rules are so complex they are impossible to comply with, or absorb resources out of all proportion to the level of benefits offered,” she says.
"Radical reform will simplify the choices available to consumers and help them understand their entitlements. More fundamentally, it will help safeguard their benefits - after all, occupational schemes are set up voluntarily by employers, and regulatory burdens will only encourage them to shut them down."