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David Pitt-Watson’s research paper comparing UK pensions with other European countries generated plenty of easy headlines last year, painting a picture of a bloated pensions industry intent on ripping off consumers with high charges. Combined with the BBC Panorama programme’s controversial pensions documentary, much of the media was sent into a frenzy, devouring the eye-watering cost figures and further increasing the general public’s mistrust of the pension industry.

But the research also created an avalanche of criticism from IFAs who suggested its use of a 1.5 per cent AMC
hugely exaggerated the costs of many UK pensions.

Advisers suggested it was unfair to make comparisons as the compulsory schemes used in the research allowed economies of scale unavailable in the UK. This month, Retirement Strategy catches up with Pitt-Watson and finds him in an unrepentant mood.

He says the 1.5 per cent figure was used to make a general point rather than to provide an accurate figure for all investors and that many people are suffering unreasonably high charges. Pitt-Watson makes some interesting observations about the benefits of Dutch investors being collectively invested and not having to suffer the lower returns associated with de-risking investments in the run-up to and during retirement.

Whether politicians have enough hunger for this type of radical transformation of the UK pension system is debatable although I am sure John Hutton has taken careful note of such models as part of his work on public sector reform.

Elsewhere in this issue, The Retirement Partnership director Billy Burrows says it is time for the industry to come up with a new term for third-way products to improve consumer understanding of the various options on offer.

There has been plenty of movement in the so-called thirdway market, a vague term which has been used to describe any products which offer a combination of income, guarantees and investment flexibility. A number of firms with grand plans have been forced to pull out of the market although it is encouraging that well known brands such as Aviva and Just Retirement are soon to enter the fixed-term space. In this month’s head to head the CBI and Age UK debate whether the Government has struck

As always, any comments about the publication or suggestions for subjects to explore in future issues should be sent to

Paul McMillan
Retirement Strategy


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