Comments from True Potential Managing Partner, David Harrison
We have long argued that the pensions system in the UK is in desperate need of a complete overhaul if it is to regain public confidence. With that in mind, it was good to see the Pensions Bill take centre stage in the Queen’s Speech today.
In March I wrote in the Telegraph that I felt reassured by what ministers and officials at the Treasury had told me in respect of pensions and investments. Both the Budget earlier this year and today’s Queen’s Speech show that the government is serious about introducing greater flexibility into the system and we welcome that.
We should not be under any illusions however. There is a long way still to go if we are to restore public confidence and credibility into the system. Attention over the last few days has tended to focus on introducing Dutch-style collective pensions into the workplace, which ministers say will offer people better value by pooling the risk, than if funds were run individually. This is probably a good time to point out that Dutch politicians have recently called for collective pensions to be replaced by the ones we have here in the UK, such is the poor performance of some of their collective defined contribution schemes (CDCs).
The fact is that no one knows what pension they will get in 20, 30, or 40 years’ time and the introduction of collective pensions won’t change that. We still need greater simplicity, accessibility and transparency to help build confidence and to get people saving again. That is why I was more pleased by the announcement today that pensioners will be able to withdraw their savings as they wish. Introducing more flexibility is where efforts should be focused and there remains plenty of work to do.