The root of the pensions crisis

Oct 12 2004 by Brian Amble Print This Article

Is there a pensions crisis in the UK?, a paper by E Philip Davis, professor of economics and finance at Brunel University and a fellow of City University's Pensions Institute, provides an excellent – and detailed - analysis of Britain's pensions crisis.

….we have seen that in some areas the UK system remains satisfactory, but there are both current and prospective difficulties that suggest that the system is either not sustainable or will not provide adequate retirement incomes in its current form. These vary from the current funding problems of defined benefit funds and their ongoing abandonment to difficulties in social security, annuities, contributions and overall saving.

In our view, many of the problems link to the high level of reliance on voluntary funding, combined with low public pensions and reliance on means tested benefits for those without pension funds.

His proposed solutions? Like many other experts, he suggests boosting in the basic state pension to levels typical of countries such as the Netherlands and the US - roughly 30-40% of average earnings – and eliminating means testing.

More controversially, however, he is also in favour of compulsory contributions to private pensions, "including compulsory and sizeable employer contributions", something that would not sit well with employers.

E Philip Davis | Is there a pensions crisis in the UK? [PDF]

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