Sting in the tale - starting with a clean slate
British people deserve a simple pensions system. It would be a fitting reward for the effort they have already put in; to become the most pensioned people in Europe. We have set aside £1,100 billion in pension savings, which is more than the rest of Europe put together.
The trouble is, though, we have an unfortunately complex pensions system in the UK which just seems to be getting worse and worse. Pensions are hitting the newspaper headlines once again and, once again, the stories are not positive ones. Government now has to act decisively to deliver on its promise to simplify our pensions system and to make things easier for those of us involved in the currently perilous business of advising savers and providing them with products. Pension providers and advisers want a simple and stable system where we can advise and sell with confidence.
The system also has to be fair. It would be of no use at all if our pensions system is simplified in isolation. At the moment, pensions are not suitable for all in the workforce because of the way pension savings interact with means-tested state support systems. If a pension product is not a suitable investment for any given individual, it is unlikely to become so merely by being simplified. Simple products that are not suitable, are not suitable.
The issue of suitability needs to be addressed at the same time as the issue of simplification. If we do not end up with a system based on fairness to individuals being implemented alongside a simplified pensions regime, Scottish Life feels there would be little point in having a simplified system in the first place.
As usual, we are making our views known to government and the media. In plain English, what we are saying is we need a simple system which is also fair. At worst, a fair system that is also complex would, perversely, be an acceptable outcome, whereas a simple system that remains unfair would not. Itís as simple as that.
First published in Pensions Week, 27 May 2002