ACA calls for new cost-effective pension approaches to be developed

Speaking at the Association of Consulting Actuaries's (ACA's) annual dinner, chairman Keith Barton warned that pension provision was likely to weaken unless the government undertook a radical rethink of pensions provision in order to free up cost-effective pension choices for employers.

Barton called for the creation of new risk sharing pension design options, as he doubted that the personal account reforms were sufficient to grow extra pension coverage in the way the government hoped.

"The reality is that the levels of retirement income which personal accounts will provide are unlikely to lead to a prosperous retirement for the majority of members. This might therefore lead to some disillusionment and opt-outs even where there are no better alternatives.

"Introducing personal accounts against a likely backcloth of rising taxes also seems just about the worse time to ensure a decent take-up," he said.

"The reality is that good employer sponsored pensions schemes are the best way for employees to save for retirement.

"My hope is that the current economic situation will bring about this realisation and acceptance that different thinking from that which led us into the current situation is needed to take us away from it.