The government must act to close the widening gap between public and private pensions, or face increasing resentment between workers, a senior industry expert has warned.
Ian Farr, chairman of the Association of Consulting Actuaries (ACA), said swift action on workplace pensions was needed, including the introduction of more schemes where employers and staff decide how much risk to share.
“Failure by the government to act decisively and radically in terms of private pension reforms will breed growing resentment between private and public sector employees, where pensions are now often much better,” he warned.
Eight in 10 final salary pension schemes have closed to new members, compared with 68% two years ago, ACA research found.
Farr said this raised the prospect of more people failing to save for a pension, particularly among the young and middle aged. “We encourage the government to make legislative changes to encourage the take-up of risk-sharing schemes, which are not currently as simple as they could be since current legislation restricts their widespread application,” he told Personnel Today.
Figures from the Office for National Statistics also revealed a growing divide between the sectors. It said the number of people paying into final salary and other schemes dropped between 2004 and 2006, from 9.8 million to 9.6 million. Private sector members fell 400,000, while public sector numbers rose by 100,000.