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Britain’s ‘outdated pensions system in need of reform’

 

A leading pensions expert has called for a radical rethink of the pension industry after new research found that just a quarter of workers plan to retire at 65.

 

In a new report, Pensions – Time for change, former government advisor Dr Ros Altman claims that the existing pensions system is not fit for purpose and is ripe for reform.

 

With millions of people due to be enrolled in pensions as part of auto-enrolment, Dr Altman warns that individuals may be exposed to ‘risky’, hard-to-understand and outdated retirement saving schemes.

 

‘The current pension products are designed for the past, rather than the future,’ she said.

 

Specifically, she calls for an overhaul of defined contribution pensions, which she believes ‘are not fit for 21st-century lives.’

 

Defined contribution schemes are dependent on investment returns and annuity rates. However, the report argues that inadequate standard investment options and poor value annuities will result in ‘disappointing’ pensions for millions of people.

 

‘A record one million people are now still working beyond age 65,’ commented Dr Altman. ‘The old notions of 'early retirement' are being consigned to history, but far too few workers are planning ahead for longer working lives.

 

‘This has to be part of the solution to our pensions crisis and, in fact, can be a very positive model for the future. The whole concept of retirement is changing. It will become a process rather than an event.’

 

A recent survey found that 49% of over-50s plan to continue working past the traditional retirement age, while a further 40% intend to work on a part-time basis. Just one in four expect to stop work completely.