In response to the public policy debate about pension gaps and
auto-enrolment, Pierre Coussey Chartered Financial Planner looks at
some innovative options available to pension savers.
The debate about an appropriate pension system to suit the
current social and economic realities facing the public still
wages, even though automatic enrolment will start to enter force
later this year. One concern is that those people in the middle of
their working lives face a risk of not earning enough. In this
article, Pierre Coussey offers his own view, exploring the options
open, including a new prospect known as Third-Party Sponsorships.
He provides a background and case study demonstrate what can be
made possible with new to thinking and innovation to create
potential outcomes that are affordable and 2-4 times greater.
- Many in the pension industry have identified that there is a
huge savings gap in the UK. However for the last 20+ years the
industry has not managed to solve the problems and, if anything,
things have become progressively worse.
- For most pension specialists, the main issues are not really
about which pension provider to choose, the investment management
charges or even the investment style. Yet this is exactly the area
on which the industry seems to concentrate all its collective
- The problem is that the industry have been complicit in
transferring the risk from employers to employees without ensuring
they understand that risk. Those half way through their working
lives are woefully short of retirement savings and worse still have
lost faith in the industry. Auto-enrolment may help, but it brings
a double-edged sword that could mislead people into believing that
an 8% contribution level is enough.
- One solution may be Private Third-Party Sponsorship. This is
the addition of an extra party willing to help fund for an
individual to reach retirement aspirations in addition to
traditional sources. It is a new form of private sector partnership
to help public/society needs.
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