Advertisement
Not a member of Pastebin yet?
Sign Up,
it unlocks many cool features!
- Employees will be able to put their money into Dutch-style “collective pensions”, shared with thousands of other members, in a radical shake-up of workplace pensions expected to be disclosed in the Queen's speech on Wednesday.
- Supporters say retirement incomes could rise by thousands of pounds in the so-called “mega funds”, which are regarded by some as less vulnerable to variations in the stock market.
- The controversial changes, which could be introduced by the department for work and pensions as early as 2016, are intended to give pensioners better value for their money.
- The minister of state for pensions, Steve Webb, has previously said collective pension schemes are “some of the best in the world”.
- The principal advantage was “pooling [the] risk” of investments performing less well than expected among large numbers of people of different ages, “just like car insurance or the NHS”, he told the Sunday Telegraph.
- “It gives people greater certainty and probably better value,” Webb said. “There are some quite strong claims made for how much better it is. People say you will get a 30% bigger pension.
- “You might, you might not, but clearly it is pretty unambiguous that you will get a more certain outcome and potentially a better one.”
- However, critics of the collective pension model have warned that, unlike with a fixed annuity, pensioners only have a “target” for what they will receive in retirement, instead of a guarantee.
- If the collective fund’s investments fail to make the expected profits, pensioners’ incomes could fall in some cases.
- The plan is based on schemes in the Netherlands and Scandinavia. However, Dutch political parties have recently called for collective pensions to be scrapped in favour of British-style individual pensions.
- Meanwhile, the Treasury will take responsibility for a new bill that will remove tax rules that have prevented pensioners taking more than a quarter of their savings in a cash lump sum.
Advertisement
Add Comment
Please, Sign In to add comment
Advertisement