Current pension system not fit for purpose

Only a fifth (21%) of respondents believe the UK’s current pension system is fit for purpose, and are satisfied with existing defined contribution (DC) and defined benefit (DB) schemes, according to research by Aon Hewitt.

Its research, which polled more than 750 employers, looked at the potential impact of the government’s defined ambition pension.

The proposals, which the government put forward in November 2012, aim to bridge the gap between DB and DC pension schemes. A working group is looking at a DC Plus scheme and a DB Lite scheme.

The research found that 14% of respondents support the proposals for a DB Lite scheme, while 34% are in favour of a DC Plus scheme and 32% are in favour of collective DC solutions.

Kevin Wesbroom (pictured), senior partner at Aon Hewitt, said: “We are encouraged that there appears to be broad support for the initiatives the pensions minister, Steve Webb, has developed under the defined ambition heading.

“The attendees at our conferences represent a large cross section of informed participants and professionals in the pension industry and their attitudes, reflected in our survey, should give encouragement to the government as it develops its thinking on defined ambition schemes.

“The broad support for collective DC solutions was even more encouraging, and significantly more favourable than the generally negative stories one sees about these approaches.

“We pressed our [respondents] on their concerns about the collective DC approach, which despite any potential downsides, has the potential to deliver higher, and more stable, outcomes for members than conventional DC schemes.”