Making pension contributions compulsory with no opt out and increasing the minimum levels individuals have to pay in by another percentage or two will not be the answer to Britain’s long term pension conundrum according to Dr Geraldine Kaye, managing director, GAAPS Actuarial.
Dr Kaye commented, “The simple fact that a large percentage of a small amount is still small and a small percentage of a large amount may be large, seems to continually escape our pension commentators. Requiring low paid people to pay a percentage of their salary into a pension fund will, in the short term, only make them even worse off at time when they are already struggling to make ends meet, and it is likely they will continue to struggle financially in the longer term however and wherever their pension fund is invested.
“We need a real root and branch investigation into the true purpose of corporate/Government funded pension plans not just a review focusing on monetary concerns but one that also includes long term care provision partially through some ring fenced taxation of UK pension funds.
“Pensions and long term social care have to sit more closely together. Governments are still getting it wrong as these two should be balanced better much better. The three questions I keep asking are 1) what really defines an adequate pension, 2) how is one’s health viewed as you get older, and 3) what is the true function of a pension fund?”
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