GOVERNMENT plans to encourage a new type of pension system got a tepid response from the industry yesterday, with concerns about how it would work and the risk it would expose savers to.
Pensions minister Steve Webb promoted the collective defined contribution (CDC) schemes this weekend, which would allow people to pool their savings and risk, but some experts have concerns over the scheme.
“There is clear evidence both from recent Dutch experience and from our own with-profits funds that such schemes can go down as well as up. They are complex, uncertain, unproven and rely on a constant flow of new members,” said Tom McPhail, head of pension research at Hargreaves Lansdown.
“People in the UK need save more for their pensions. The fact that we save so little makes comparisons with Holland difficult,” added Helen Forrest of the National Association of Pension Funds.
PwC pensions partner Peter McDonald concluded: “The Dutch system was designed for a different generation; Any transformation of the UK pensions system needs to be fit for tomorrow’s workers.”