Plan Sponsors Urged to Look to Pension Problems of Tomorrow
27 June 2012 (PLANSPONSOREurope.com) - While UK pensioners have benefited from the fastest-rising incomes plan of the last decade plan sponsors should look to the pension problems of tomorrow, Malcolm Mclean, consultant at Barnett Waddingham has told PLANSPONSOR Europe.
New research from the Institute of Fiscal Studies shows average incomes in the UK have fallen by near-record amounts. Inequality has fallen back to levels last seen in the mid-1990s. Relative poverty continues to fall, but only because the poverty line is also falling: this group has undoubtedly been faring poorly in absolute terms, on average, but pensioners have enjoyed the fastest-rising incomes in the last ten years.
Mclean says: “We need to look beyond the problem of today to the problem of pensions of tomorrow. Of course people [working] now need to be encouraged to save for their old age on the basis they will have, hopefully, many years in retirement because people are living longer – if they want a reasonable standard of living in that period they are going to have to save for it.
“The government state pension will only give people a base line for a reasonable standard of living but if they want to do better than that than they have to save for themselves. For employees to join employer’s pension schemes it costs them money. Whereas I believe most employers are paternalistic at the back of their minds, there is a reality that sometimes kicks in that they can’t afford to do it. The first thing we want employers to do is to say, ‘if you really care about your work force and their future, try and encourage them as best you can to safeguard themselves and the best way to do that is to join the pension scheme’.”