The TUC’s 44-page paper, Third Time Lucky, stated that contribution levels need to increase, while structures need to work more in the interest of consumers for pension reform and auto-enrolment to succeed.
The paper cites two previous periods of consensus over pension provision, the first of which followed the introduction of a state pension following the Second World War.
The second period outlines changes made to the pension system by Margaret Thatcher and the government of Tony Blair, when responsibility was transferred to individuals.
Now, the TUC is calling for a new, progressive consensus based on the flat-rate pension and auto-enrolment focused on empowering the consumer and providing adequate levels of income in retirement.
Within the paper report authors Craig Berry and Nigel Stanley identify several problems with current pension reforms that still need to be resolved.
Mr Berry said: “The pensions industry has an interest in the success of auto-enrolment because it will hugely expand the customer base, but this means we must end the asymmetrical consumer/provider relationship whereby the industry can exploit the general public’s inherently limited knowledge of pensions saving.”
Adviser view
Steve Clark, director of Leicestershire-based advisory firm 44 Financial, said: “The single-tier pension levels are basically at subsistence levels, and I can’t see current auto-enrolment contribution levels offering a good level of retirement income, so any consensus here, and on governance would be a good thing.
Industry view
Darren Philp, policy director of the National Association of Pension Funds, said: “This is an intriguing report that hits some of the key issues affecting workplace pensions. Defined ambition pensions are not going to be for everyone, and millions of people are going to be automatically put into a defined contribution pension, many for the first time. It is important that we do not get distracted from the task of getting good value for money out of the DC pension model.”
| Key improvements called for by paper |
An increase in the single-tier state pension, with current proposed levels “effectively a spending cut paid for by future generations”. Increases in minimum contribution rates for auto-enrolment. An improvement in defined contribution pensions, rather than deregulating defined benefit pensions, including the promotion of collective defined contribution schemes, and improvements to governance arrangements and annuity markets. A guaranteed voice for workers and employers for auto-enrolment schemes to combat the dominance of providers. |