English Pension Policy is finally stepping in the right direction

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What happens if one is united by the UK’s breach by a system to ensure the safety of one of the elderly age? Answer: It’s a mess. Over time, the solution that solves creates new messes.

There are two different challenges related to today’s pension system.

First, the present and future pensioners are now in four categories: reliable, state sector employees using retirement with inflation, inflation-protected pensions; Reliable useful (WB) beneficiaries of private pensions, many have now closed to new contributions and new members; Young people in contribution (DC) schemes (DC) circuits carrying all risk of investment and longevity; and weak paid people depending on the state pension.

These sections are the end of history, except for arbitrary products. Why do the public sector be safer than pension measures and old private sectors, employees today’s private sector workers?

The second failure is that the economy of the pension system is more productive. The reason for this is both highly divided and risky. According to Institute of Pension PolicyOnly “18 percent” of England’s “18 percent” of Britain’s productive assets – 18% of “18% of” corporate bonds, private capital and alternatives “are not intended to create local developments that are developing the national well-being depended.

Given the legacy of the former pension promises, a jumping of something (and fair), unfortunately, unfortunately. Thus, the government’s reform plans are to make the questions in a better direction. Answer: Yes. Matches a consensus that has three main components: consolidation; productive investment; And more savings.

I would add universalality. Well, in principle, these risks are now shared so unevenly among the sectors and generations. This cannot be changed overnight. But it should be over time.

Last two government documents – the final report PENSIONS Investment Review and Pensions at work: a roadmap – Describe the submitted direction.

The latter, Torsten Bell, the Pension Minister, explains Pension schemes bill Will set the results of the review. The main goal is to create better, better adjustable, better-adjustable, better valuables, better assessors who invest in more productive assets.

It gives a large consolidation theme, because there is a scale and coverage of pension funds management. Such consolidation will be at least better management of risks and invest more in innovative investments. Today according to the road map of pensions at work, The 2000 DB scheme holds £ 10 billion in assets between them. Again there are many DC schemes that are less than 100 members.

Links to this controversial issue: the role of pension funds during the promotion of economic growth. There is a picture for the lack of prejudice to invest in domestic productive assets. The same thing is to invest in the best thing in the index tracking funds that is a parallel view.

I had such meetings, but I am no longer in the position of pension funds for the reasons set on the road map. Thus, this is said: “The quality of our pension system, the quality of all our hopes, which we have retired, as well as one of the largest local pools of our economy …

It should be done, despite the care and careful. But it is necessary to do it. It can only be done by large schemes and large funds that can work in a highly professional way. These reports also have to emphasize the higher revenues, to emphasize that the protectors will better pension.

You will also need to increase savings rates. Contribution rates are very low. UK National Savings Rates are also very low. To grow old, it is a necessary step to grow the last one. These great issues will be part of the next stage of the review of pensions to be directed to the adequacy of retirement revenues.

This government can be the most important economic legacy of the UK’s irrational and non-adequate pension system. At least, it is a sensitive start. Need to continue to go.

martin.wolf@ft.com

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