One of the old lags contacted this morning with this thought.
As you know I start from a different angle and premise – that most employers have never provided pensions for their employees.
Even in the hay day of DB provision around 1970 (yes), I expect only about 1-2% of employers provided pensions. Those were the days when repeated governments pondered over how to encourage occupational provision and eventually all accepted that for most employers it was unrealistic and opted for a state run add on.
SERPS did carry on to 2016 when it was finally snuffed out but it had gradually been eroded. The great Labour experiment of the 1970s and years that followed was not a success, it did not grab the heart strings of the working population not in large occupational pension plans paying pensions – subbed by employers.
I am just about old enough to remember when SERPS was getting in the way of insurance companies wanting to offer personal pensions – a means to annuities. SERPS was taken our of the equation by large employers offering contracted out money purchase plans and DB schemes took on SERPS responsibilities.
My friend would like to bring back a second pension provided by the Government and replacing SERPS (which has been put to bed for the past 1o years)
Canada did the same more recently, increasing the CPP benefits and contributions rather than introduce AE type DC.
Hence my new step is a wedge of CDC, state run (or can be a bit more local but compulsory).
That eases the position of low – median earners and provided a sounded base for the next in line in income levels.
It leaves plenty of scope for more on top to deal with higher earners and also those wanting more flexibility when they stop work (or not).
Both of these area of pensions need serious attention from government and industry.
His view is that providing DB or CDC pensions to those who work for all but a few sophisticated and well-heeled employers is far too ambitious.
I do not agree with him, I think that in the fifty years since SERPS was introduced (1978) , our capacity to administer , invest and communicate to workers and those leaving the workforce has increased. Nobody thought you could do auto-enrolment until it was done. Nobody thought it would deliver as it is. Nobody had thought we’d have the problem now – making the money pay pensions. My friend is a grump and I love him for it!
I am very pleased that my friend has put up his hand and said the insurance and pensions industries are not sufficiently competent to be awarded this job.
He/she remains nameless and I’m quite sure that the majority of us who know and respect will feel challenged by his idea. I think this is why we have Nest , he/she may have other ideas on delivery and if there is a PPF angle in this, let PPF play its hand.
What has not been understood by commentators (including bloggers) is that the Kings Speech suggestion that savers should be diluted into pensions, is more radical than we supposed.