This week the big annual pensions industry gathering is taking place – the National Association of Pensions Funds (NAPF) is meeting in Liverpool.
It is always a great opportunity to take the temperature of what people (employers, trustees, suppliers, advisers and government ministers) think about the current state of British pensions.
A key talking point this year is freedom and choice. This is a vital topic given the government’s announcements in recent months giving people greater flexibility in how and when they take money from their pension pots.
The bottom line summary of all views is: most in the industry are very concerned that this greater choice will not be good for most people due to lack of responsible choices – there are too many risks and possible tax implications that the average person may not be aware of.
There is also the feeling that the legislative changes are coming too quickly with little time to implement. For example, not all schemes will be able to offer the aforementioned flexibility by April next year (they do not have to; it is merely an option) partly because they do not want to rush in changes without working it through carefully.
On Wednesday evening, I also had the pleasure of dining with Pauline Vamos, CEO of the Association of Superannuation Funds of Australia (the Australian equivalent of the NAPF). In a typically direct Australian way she gave her insights on the state of UK pensions. Two key points were:
- The UK state pension is not sustainable – it will bankrupt the country ultimately. Why give it to everyone? she asked.
- The current level of pension contributions in the UK is pointless, it is far too low to be of any use. She and I agreed that leaving the vital increase (under auto-enrolment) in contributuons to the politicians to decide was a bad idea. They haven’t done it to date, so they may never bite the bullet. An external body should take charge.
However, I was encouraged to note that the Australian pensions industry is much larger than that of the UK due to the number of people saving into pensions and their higher level of contributions. If we get it right in Britain, our pensions industry (and pensions customers) should also grow significantly.
Job growth in any sector can only be good news, surely?
Debi O’Donovan
Editor
Employee Benefits
Twitter: @DebiODonovan