Link Group launches whitepaper calling for pensions’ overhaul in the UK
- Retirement readiness, members’ choice, and industry infrastructure the three focal points for UK industry evolution recommended by Link Group’s study of both the Australian and UK pensions industries
Link Group, the global leader in pension solutions, today launches its Australia-UK whitepaper – ‘Time To Turn the Pensions Market Upside Down’ - sharing a new vision for UK pensions. The whitepaper examines the two markets and proposes key recommendations to help UK members prepare for a healthier retirement outcome as seen in the Australian approach to pensions.
The UK Pensions industry is fragmented, with no single authority setting the strategic long-term direction of pensions. In addition, with the extraordinary economic pressures on households, the question remains as to how can we maintain our singular focus on retirement?
Crucially, the UK system has negative implications for savers. Research carried out by Link Group to support the whitepaper launch found that a third of UK adults (32%) admit to not feeling like they’re in control of their pension and retirement savings. More than half (52%) stated a clear desire to be more involved in the management of their pension scheme.
It’s a notably different story in Australia, which has supported a progressive, member-led model over the last 20 years to help members plan for better retirement outcomes. Through the lens of the UK/Australia market comparison – and based on its deep understanding of member behaviour, Link Group proposes three key recommendations for discussion within the UK pensions sector:
Retirement readiness: Mandating higher minimum contributions, despite economic pressures, to protect both member fund growth and the financial relationship with our future selves.
Members’ Choice: Give control back to employees and enable them to take their pensions with them by the creation of an industry clearing house.
Industry structure: Empowering a single industry body to represent the interests of the whole UK industry, driving long term strategy for UK pensions
Link Group’s research also revealed just why these changes are necessary, particularly when it comes to member engagement. Just over 2 in 3 (67%) of those with multiple pensions schemes want to combine them into one place. And there’s also an issue with providers themselves. A quarter of UK adults (25%) say that their pension provider does not make it clear what they are able to change in relation to their pension and how those changes can be made (27%). But the reality is that while only 54% of savers say that they trust their employer to pick the ‘best’ scheme for them, according to The Pensions Regulator 95% of people remain in their default fund.
Richard Wilson, General Manager of Retirement & Superannuation Solutions UK (RSS) comments:
“The disconnect between UK adults and their pension is both notable and unsustainable. Such lack of engagement and lack of control had led us to a worrying lack of understanding. The UK is certainly making small steps towards better member outcomes. But fundamental change is needed now in order to build a pension industry truly fit for members, for purpose, and for the future.
“Thankfully, there is a road map for success. Using the experience and insight gathered from the Australian system enables us to know not just exactly where we can make the necessary changes to drive better outcomes for members – retirement readiness, members’ choice, and industry structure, but crucially how these need to be reshaped. Successfully making this happen will be transformative not just for pension savers, but for the entire pensions industry. It’s time to turn the UK market upside down.”