News
Political and market failure contribute to pensioner poverty
A new retirement report commissioned by Aviva has provided a review of retirement provision among the over 55s.
According to the report the key failures contributing to pensioner poverty are:
- A complex and inefficient state pension system;
- A failure to respond to the decline of occupational pensions with a culture of individual responsibility;
- Failure to shop around at retirement, because investors aren’t encouraged to use the open market option
Tom McPhail, head of pensions research at Hargreaves Lansdown and chairman of Pensions Income Choice said: "Politicians and insurance companies alike have let investors down. The state pension system is not fit for purpose. It is complex and bureaucratic, for some people it is a disincentive to save."
"We should be encouraging as many people as possible to save for retirement; the fact that 39% of the 55–64s are not saving at all shows the system isn’t working.’
He added:"Crucially, the open market option should be the default at retirement, thereby ensuring that as many investors as possible make an active choice with their pension fund. Insurance companies should be promoting choice, rather than simply allowing their clients to end up with second rate and inappropriate products."
The Pensions Income Choice campaign has proposed that the open market option should be the default at retirement.
