The UK is close to achieving consensus around pensions but weaknesses in the system must be addressed, according to a new pamphlet published by the Trade Unions Congress (TUC).

According to the paper, the findings of Adair Turner’s Pensions Commission in 2002 have helped usher in widespread acceptance of the shared responsibility of employers and employees, evidenced with auto enrolment, and the need to simplify and increase the state pension – enshrined in the move towards a single tier state pension.

“For the most part, this adds up to progressive change – by no means perfect, but much better than what went before. Importantly these reforms also have a good chance of sticking, because they have achieved a wide degree of consensus across political parties and among the various pension interest groups,” reads the pamphlet, Third Time Lucky.

Despite this, the authors say a number of problems remain. They argue that the single tier pension is too low, as are contribution rates into DC schemes, which should increase and apply to all earnings, and that improving DC, rather than deregulating DB pensions, should be the focus of the government’s “defined ambition” agenda.

The authors also say trust based schemes should be preferred for auto-enrolment, stating: “There is market failure across pensions provision as suppliers are smarter and more powerful than the employers now choosing auto-enrolment pensions, and there is no guaranteed worker voice.”

Commenting on the report, TUC General Secretary Frances O’Grady said: “The enduring political consensus around auto-enrolment and state pension reform gives us a great starting point for a modern pension system that is fit for purpose.

“But even the best structure won’t work unless it provides people with an adequate income after they have retired.”

Share Story: