Private third-party pension sponsorship in the UK: a chance for better outcomes

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 expertise. 
• 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.

To read the full Thinkpiece, please see the "Document Links" box at the right of this page.