Figures released by the Organisation of Economic Co-operation and development in October have given rise to a new debate on the UK pension sector and its in-capabilities.
The figures revealed a 4% rise in pension fund net deficits from 9% to 13% in six months.
Furthermore, many large business final salary schemes have been abandoned in the last few months as these have become too expensive for employers suffering the effects of the recession. Currently only one in twenty of the biggest businesses are offering final salary schemes to new employees.
Head of pensions at Hargreaves Lansdown, Tom Mc Phail, blames bad political decisions for the demise of the British pensions sector and the weakened position of today’s pensioners.
He explains that the pensions sector is witnessing a shift away from guaranteed pensions like the state pension and final salary schemes towards a situation where individuals are personally responsible for their retirement savings and the associated risks.
Pensions are difficult enough to navigate at the best of times and in a time when even experts agree that the pensions system is ‘not fit for purpose’ the task of finding an appropriate scheme seems even more daunting.