Call for pension freedoms to be reversed

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The pension freedoms reforms should be reversed to make sure part of the pension pot is used to provide a steady stream of income, according to research.

The Melbourne Mercer Global Pension Index ranks the pension systems of 25 countries. In its latest report Denmark and the Netherlands came first, followed by Australia.

The UK was in the third bracket, with researchers saying the UK has a sound structure but some areas for improvement. Other countries in this tier include Sweden, Canada and Chile.

But the researchers also noted the UK’s pension system could be improved by “restoring the requirement to take part of retirement savings as an income stream”.

Other recommendations include boosting the minimum pension for low-income pensioners, increasing the coverage and level of contributions of workplace schemes, boosting household saving and encouraging older people to work.

Mercer senior associate Glyn Bradley told the Daily Telegraph: “The UK’s new pensions freedoms are a welcome once-in-a-lifetime change but they pose difficult challenges in ensuring that tax-privileged saving is used to provide an adequate income in the final years of life, and not exhausted in middle age. Annuities might be part of the answer.”