2011 has given us plenty to debate and discuss in the retirement planning space with a host of new initiatives, rules and proposals from a coalition Government keen to make its mark.
New annuitisation rules have been implemented and a radical restructure of the state pension has been put forward while the Government has set itself up for a battle with the unions over public sector pensions.
Pensions minister Steve Webb has won plaudits for his technical knowledge and determination to push forward his own ideas but will only be able lay claim to a legacy of reform if he can get his way on big issues such as state pension reforms. His plans for a higher and simpler state pension have been widely supported by consumer groups and the industry but getting final approval from the Chancellor may prove more difficult.
Over the past year, there have been plenty of calls for a more radical reform of private provision from various thinktanks and organisations.
This month, Retirement Strategy catches up with Cass Business School’s David Blake, who believes there are fundamental problems in the DC model. Blake recently got plenty of media publicity for his views on the best theoretical time for people to start saving into a pension. Away from the easy headlines, Blake has plenty of other views which should stir debate.
Although he sees Nest as a good idea in principle, he says it was only ever supposed to be part of the solution of providing an adequate income in retirement, a point that seems to have been lost to many.
Webb has spoken warmly about the American Save More Tomorrow system, whereby a percentage of future pay rises is earmarked as a pension contribution, but has been non-committal about its introduction. Blake suggests it is vital that contribution levels rise from the levels currently proposed.
Worryingly, Blake suggests the message of saving for a pension will only really get through when the post-baby boomer generation starts retiring into poverty and impresses on its grandchildren the need to save.
Elsewhere in this issue, Billy Burrows explains why he has done a U-turn on his cynical opinion of fixed-term annuities, taking the view that a greater range of income products will be available by the time the investor ends their fixed term.
As always, any comments or suggestions for future issues can be sent to firstname.lastname@example.org