Consumers keen on compulsion in pensions market

It has long been thought of as the most unpalatable solution to the pensions crisis, but it appears that UK employees may actually welcome compulsion.

More than 12 million people are not saving enough for their retirement, according to the Pensions Commission interim report published last October.

The commission touted compulsion as one of three possible solutions to the crisis, but the government is keen to avoid this, believing it will cause resentment.

However, a survey of 2,000 people by consumer group Which? reveals that seven in 10 respondents believe employees should be compelled to contribute to their own pension.

The Which? Choice report also shows that 73% think employers should be forced to pay pensions contributions.

According to Which?, the politically driven ‘choice’ agenda is failing to meet the government’s pension policy objectives and is having a seriously detrimental effect on consumers.

The transfer of risk to individuals, the proliferation of pension schemes which offer little security or value and the failure of the private pensions industry to offer people the pensions they need or want, have all led to a massive shortfall in pension provision, the group said.

Faced with this insecurity, many people choose to do nothing and rely solely on the state pension system.

Graham Vidler, the head of policy at Which?, said: “This is unacceptable because the state system will struggle to provide a decent income in the future as a result of demographic changes.

“We believe that only by making saving for pension compulsory, can the government prevent large numbers of people living in poverty during retirement.”

The Pensions Commission is due to publish its final findings in the autumn.

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