Company pension schemes are becoming increasingly unaffordable as people
live longer and retire earlier, according to the new chairman of the National
Association of Pension Funds.
Peter Thompson told the NAPF’s annual conference in Birmingham last week
that many firms are closing their defined benefit schemes to new entrants
because of rising projected costs.
He said the ramifications of increasing longevity will affect employers and
scheme members as well as the economy and the attitudes and beliefs of society.
Thompson said, "There is a dichotomy here – a discontinuity between on
the one hand an increasing life expectancy and on the other a reducing working
life.
"It is neither logical nor reasonable to suppose the discontinuity can
continue and indeed, become greater indefinitely.
"The retired part of our lives cannot continue to expand apparently
without limit, while the working part stays the same or reduces – not if we
expect to continue to enjoy a reasonable standard of living in
retirement."
Thompson, a partner at consultancy William M Mercer, called for a complete
review of what is meant by retirement to ensure pensions can continue to
provide a decent standard of living.
He added, "What is needed is a fundamental review of what we mean by
retirement and what we mean by work in an era when flexible working and so on
are likely to become more common.
"It demands an acceptance by all of us and by the Government and its
agencies of a blurring of the edges between paid employment and other forms of
work, and the need to modify our present systems and approaches to reflect the
changing workplace."
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By Ben Willmott
