Turner sees more UK pensions funding
UK Pensions Commission chairman Adair Turner says more saving into funded pensions should be part of the response to the demographic challenge facing the UK.
“Whatever choices we make on the state system, it is clear that increased pension saving into funded pensions will also have to be part of the response to the demographic challenge if people are to achieve what that they are likely to consider adequate pensions,” Turner said.
He told the Trades Union Congress meeting that both the present and previous governments had “certainly believed that and the overt aim of British pension policy for several decades has been that the percentage of pension income coming from non-state sources should rise”.
But it was clear that the UK was not on target for “a sustained rise in private pension income” - whether from occupational pensions or personal pensions.
He acknowledged that participation rates in private sector pension schemes are in slight decline. And that contribution rates will fall over the long term with the shift from defined benefit to defined contribution.
Turner told the delegates that there are three inherent barriers to a voluntary system.
The first is that many employers do not see it as their role to provide pensions. The second is that individuals find it very difficult to make sensible decisions about long-term savings. And lastly there are the costs involved for the financial services industry in selling pensions.
“So on compulsion, quite as much on state pensions, taxation and pension ages, there are no easy answers.
“Indeed all the Pensions Commission can promise you, or government or business or individuals, is that there are going to be no easy choices among the recommendations we present on 30 November.”