The UK private pension system is “not fit for purpose” and “hugely inefficient”, research by the Royal Society for the encouragement of Arts, Manufactures and Commerce finds. http://www.professionalpensions.com/professional-pensions/news/1930094/uk-schemes-not-fit-purpose-compared-rest-europe
The report by the social lobbying group - Building the consensus for a People's Pensions in Britain - found up to 40% of UK pensions are being swallowed by fund management charges. This means that for every £100 workers put into their pension pots £40 goes to the bankers and fund managers who are in control of the system. It found if a typical Dutch and British person saved the same amount for their pension, the Dutch person would receive a 50% higher income in retirement.
The report called on the government to build a broad cross party consensus in which political parties, employers, unions, and pension funds agree to implement a ‘pensions architecture' that brings the UK in line with countries such as Holland and Denmark that enjoy the lowest levels of pensioner poverty in Europe.
In its report, the RSA recommends that a Commission of Inquiry be set up by the coalition government to build on the growing consensus about how to solve Britain’s pension crisis. The Commission would iron out the details and help ensure that employer organisations continue to build on initiatives by the TUC and CBI in order to develop a joint strategy that tackles pensioner poverty in the UK.
Commenting on the report, David Pitt Watson says:
"By common consent, the UK private pensions system is not fit for purpose. It is hugely inefficient. The government has taken steps to address the problem but it remains in real danger of spoiling the ship for a ha'porth of tar.
The government is introducing auto enrolment, but doing little to ensure providers offer good, low cost products. It has established NEST, and loaned it hundreds of millions of taxpayer money, but has then prevented it from competing by restricting the size of contribution it can take. The danger is that we are creating a weakened monopoly rather than healthy competition.
Regulations in the UK should be changed to enable the establishment by trustworthy providers of low cost collective pensions similar to those enjoyed in Holland and Denmark.
What we are suggesting is not some new structure. It is based on tried and tested systems in other parts of the world, and recommended by pensions experts globally. What we need now is consensus, and the will to change."
This report is timely as the Independent Public Pension Scheme Commission moves into its final phase. We must defend our pension schemes the defined benefit system of the public sector is the only barrier we have left to prevent us being hurled into pension poverty.
You can find the report here >http://www.thersa.org/about-us/media/press-releases/going-dutch-how-to-double-the-value-of-british-pensions
