Rewrite the rules of the UK’s private pension system
Two-thirds of the financial wealth of British households is saved for private pensions. Yet the UK pension system is highly inefficient.
On a conservative estimate, if the UK system matched best practice in the Netherlands, Canada or Denmark, for the same pension payments British savers could expect a reliable income in retirement that is 30 per cent higher than they will currently receive.
But there is good news. In the past, the structures used in those three countries were not possible in the UK. This is changing and should, over time, provide a unique opportunity to improve private pension provision dramatically in Britain.
The problem is that since people do not know when they will die, they don’t know how much they can afford to draw down each year, so drawdown doesn’t provide an effective income for life.
This story originally appeared on: Financial Times - Author:David Pitt-Watson
