Collective pensions in the UK

How can Britain have a private pension system equal to the best in the world? We need to 'reinvent' collective pension provision in a way that is sustainable and works for employees and employers..

How can Britain have a private pension system equal to the best in the world? We need to 'reinvent' collective pension provision in a way that is sustainable and works for employees and employers.

With some modest changes, the private pension system in Britain could be radically improved. This required two things: a system of low-cost, auto-enrolled pension provision and a recreation of collective pension structures which share risks and offer superior benefits.

The message is clear: if sponsoring employers are willing to do so, it is possible to provide much higher pensions for most employees of large companies and to do so at equal cost. The law, though complex, allows this to happen; politicians and worker/pensioner bodies have shown their support in principle.

Unfortunately, there is little incentive for ‘market forces’ to encourage suppliers who promote the introduction of collective pensions. But with intelligence and goodwill, with dedication and integrity, we are convinced those involved in constructing occupational pension provision can find a way forward.

To that end, the RSA will be happy to offer whatever support it reasonably can in terms of expertise, of contacts and of background research.

Over the past year we have seen marked progress in many pension policy areas on which the RSA has been campaigning. For example, we now have two suppliers of individual DC pensions which are offered on similar terms to NEST, but without the restrictions the government placed on the latter. And the restrictions themselves are now the subject of a parliamentary inquiry.

Collective provision needs to be reinserted at the heart of our pension system.