That we have a highly complex pension system there is no doubt. Here in the UK we probably have the most complex pension system in the world. So complex that it cannot properly be explained in plain language. But that does not matter. Or at least it should not matter.
There are plenty of valid reasons why a pension system comprised of numerous state and private components will be complicated, particularly one that changes so often and tries not to make retrospective adjustments to accrued benefits.
Complexity in such a situation is almost inevitable. And, without wishing to sound like Voltaire’s Dr Pangloss, I would still have to say, again, that it does not have to matter.
What does matter is that the underlying pension system we have and the processes that support it should be benign and always act in the best interests of citizens whether they understand it or not.
Indeed, there is nothing wrong with a pension system that is complex – even one that is so complex that hardly anyone in the country can claim properly to understand it – as long as people cannot and do not lose out through not understanding it.
Obviously, the preferred scenario would be if we could have a simple pension system that everybody could understand but, yes, a complex yet benign system that no one understands but would not require people constantly to monitor it would do just fine.
It is clear to me that the worst pension system anyone could wish to have is one that is impenetrably complex but, at the same, requires people to understand all parts of it and take action as it changes in order not to lose out. That is the worst of all worlds.
Unfortunately for us all in this country that is what we seem to have. Indeed, we find ourselves in a world where nearly one million women born at the wrong time were seemingly required to keep up to date with pension legislation in order to be aware of catastrophic changes to their retirement plans.
We find ourselves in a world where more than a million employers are being made aware of a cute, fluffy monster called Workie when really they need to know that the cost of running a business in the UK has just gone up and auto-enrolment will cost them both time and money.
And we live in a world where who knows how many people are soon to find out that being contracted-out may well have cost them a big chunk of the new simple, flat rate state pension they were led to expect.
These issues alongside many, many others do nothing to give people confidence in our pension system. In fact, I would say quite the opposite is most likely to be the case. What a shame it has to be like that.
Steve Bee is director at Jargonfree Benefits