Britain’s pension system is falling apart: failed by successive governments, regulatory bodies and the casino stock market
Accomplished economist Ros Altmann, a governor of the LSE and the Pensions Policy Institute, points out that most traditional final salary pension schemes have now closed and replacement money purchase arrangements are not delivering good pensions:
“Britain’s pension system used to be considered a model for others to follow. We had a strong retirement savings ethic, generous employer pension schemes and thriving private pensions. In fact, we had more being paid into pensions than the rest of Europe put together. But the system is falling apart.
“Most traditional final salary pension schemes have now closed and replacement money purchase arrangements are not delivering good pensions. As interest rates and annuity rates have plummeted, many new retirees are finding their private pensions paying far less than they expected”.
Malcolm McLean, chief executive of the Pensions Advisory Service, which gives free information to the public about pension matters notes: “Many savers have experienced significant reductions in the value of their pension savings from continuing stock market falls and delays in obtaining an annuity quote or award often meant a further reduction in the pension eventually secured.”
An Anglo-Saxon attitude:
Writing about our special friend’s situation, Time magazine’s Dan Kadlec says: “The news just keeps getting worse as it relates to retirement security. Private pensions are underfunded and fading away . . . Total underfunding is somewhere around $500 billion. Meanwhile, many companies have eliminated private pensions altogether. The Pension Benefit Guaranty Corp., a government agency, backstops the private pensions of 44 million workers. But in its latest annual report the PBGC showed a record shortfall of $26 billion.
Ros Altmann’s advice: “I believe it’s time to take the politics out of pensions policy and have a truly independent body to oversee pension and retirement policy for the future. Politicians cannot be trusted with pensions. Political time horizons are far too short – five years at most. Pensions policy has to last for decades”.
A national treasure?
Dr Ros Altmann successfully spearheaded a multi-year campaign – totally unpaid – to achieve compensation for 150,000 workers from a number of firms including Allied Steel and Wire, Dexion and UEF who lost their final salary company pensions after being falsely assured by the Government that their pensions were completely safe. This led to the establishment of the Financial Assistance Scheme and the Pension Protection Fund. She also campaigned for compensation for the hundreds of thousands of Equitable Life victims. She was recently successful in highlighting the injustices of the UK annuity market and exposing the consumer detriment suffered by people buying unsuitable and irreversible annuity products. This contributed to the ending of automatic annuitisation for millions of future pension savers.
Posted on November 28, 2014, in Corporate political nexus, Economy, Finance, Government, Parliamentary failure, Planning, Taxpayers' money, Vested interests and tagged Dr Ros Altmann, final salary pension schemes, pension savings, Pensions Advisory Service, private pensions. Bookmark the permalink. Leave a comment.