Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • October 2013
10

Altmann calls for new thinking on 'inadequate' pensions

Open-access content Tuesday 15th October 2013 — updated 5.13pm, Wednesday 29th April 2020

The UK pension system is ‘out of date’, ‘not fit for purpose’ and could leave many savers exposed to poverty later in life, pension expert Ros Altmann has warned

In a report Pensions - time for change, sponsored by MetLife, Altmann concluded that defined contribution schemes were not fit for 21st century lives. She said that the time had come to change out-of-date pensions, especially as retirement prospects in the UK are more uncertain than ever and state pensions are being cut. 

'New thinking on both pensions and retirement is urgently required and those who want the best chance of better incomes will need to plan carefully for the future,' she said. 

The report highlights fears that the government's auto-enrolment scheme brings a 'significant risk' of inadequate pensions as DC schemes provide no guarantees and leave savers at the mercy of market performance. 

According to Altmann's report, 60% of pension savers say they do not understand or do not know whether they understand the risks they face in DC pensions. That rises to 75% among 18- to 24-year-olds, who are a key target for auto-enrolment. 

The report also included a survey of financial advisers, which found they believe just 33% of clients would achieve their target retirement income. When it comes to their own retirement planning, fewer than one in ten financial advisers said they would actually buy a standard annuity. 

Altmann said: 'As retirement becomes a process rather than an event the need for different options for both investment and income streams is growing. Planning flexibly is ever more important and it will also be necessary to find approaches which offer better later-life income prospects than can be provided by standard annuities.'

She highlighted the risks of relying on annuities, which do not increase with inflation. These products would potentially expose millions of pension savers to poor value and later-life poverty, Altmann warned.

The report also compared options for retirement income and explained why considering guaranteeing pensions could be an important part of the retirement income decision. 

'People automatically consider insuring their house against risks they hope they will never face but when it comes to their other big asset, their pension fund, most people do not even consider insurance against a fall in the value of their fund, or falling later-life income,' she stated. 

At MetLife, managing director Dominic Grinstead said that the need for innovation in retirement planning was vital and advice essential.

He added: 'Dr Altmann's report is an important contribution to the debate on the future of UK pension provision and MetLife is committed to playing its part.'

Responding to the report, Geraldine Kaye, managing director at GAAPS Actuarial, agreed that DC pensions were not fit for modern-day savers. 

'Pensions and long term care provision have to sit more closely together,' she said. 

'Successive governments still get it wrong as they should look to identify more effective ideas of how the two can be balanced better. 

'Three questions to consider are what really defines an adequate pension, how is one's health viewed as you get older, and what is the true function of a pension fund?'

This article appeared in our October 2013 issue of The Actuary .
Click here to view this issue

You may also be interested in...

State pension set for 2.7% increase

The state pension is likely to increase by £2.97 next year to just over £113 a week, after the consumer price index measure of inflation was found to be 2.7% in the year to September
Tuesday 15th October 2013
Open-access content

Four of top five annuity providers increase rates

Four of the top five annuity providers in the UK increased their rates by 2% in September, according to the Annuity Bureau
Monday 14th October 2013
Open-access content

Outgoing NAPF chair calls for single pensions regulator

The time has come for a single pensions' regulator to ensure ‘better’ and ‘fairer’ incomes for people, National Association of Pension Funds chair Mark Hyde Harrison has said.
Thursday 17th October 2013
Open-access content

TPR and accountants consult on assurance regime for DC master trusts

The Pensions Regulator and the Institute of Chartered Accountants in England and Wales are seeking views on proposals that will help trustees of defined contribution ‘master trusts’ show customers that schemes are being run to a high standard.
Thursday 17th October 2013
Open-access content

'Brave up' to higher auto-enrolment contributions, says Segars

The 8% contribution benchmark for auto-enrolment pensions is not enough to deliver a decent retirement income and there is a need to ‘brave up’ up to pushing it higher, the National Association of Pension Funds chief executive has argued
Friday 18th October 2013
Open-access content

Firefighters announce further strikes in pensions dispute

Firefighters in England and Wales are to strike again next week over what they claim are government ‘attacks’ on their pensions, the Fire Brigades Union announced today.
Friday 11th October 2013
Open-access content

Latest from Pensions

ers

By halves

Reducing the pensions gap between men and women is a work in progress – and there’s still a long way to go, with women retiring on 50% less than men, says Alexandra Miles
Thursday 2nd March 2023
Open-access content
rdth

Make My Money Matter's Tony Burdon on the practical power of sustainable pensions

Years working in international development showed Tony Burdon, head of Make My Money Matter, that sustainable pensions can harness trillions of pounds to build a better world – at a scale governments and charities can’t. He talks to Travis Elsum
Wednesday 1st March 2023
Open-access content
KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content

Latest from October 2013

Pensions Regulator urges vigilance on ABC structures

The Pensions Regulator has urged trustees to examine asset-backed contribution (ABC) structures carefully and explore ‘less risky alternatives’ to support defined benefit pension schemes.
Tuesday 19th November 2013
Open-access content

NAPF issues revised corporate governance guidelines

The National Association of Pension Funds has set out new remuneration principles and more robust expectations for corporate accountability in its latest corporate governance policy and voting guidelines published today
Tuesday 19th November 2013
Open-access content

Mixed movements in October annuity market

The past month saw mixed movements in the annuities market as two of the top five providers offering standard, inflation-linked, and smokers’ annuity cover cut their rates, the Annuity Bureau said.
Thursday 14th November 2013
Open-access content

Latest from no_opening_image

TPR publishes coronavirus guidance

The Pensions Regulator (TPR) has published guidance to help UK pension trustees, employers and administrators deal with the financial and regulatory risks posed by coronavirus.
Monday 23rd March 2020
Open-access content
web_p24_cat-and-fish_iStock-483454069.png

Sensitivity analysis: swimming lessons

Silvana Pesenti, Alberto Bettini, Pietro Millossovich and Andreas Tsanakas present their alternative approach to sensitivity analysis
Wednesday 4th March 2020
Open-access content
ta

IFoA adjudication panel: Mr Jack Wicks, student

On 30 October 2019 the Adjudication Panel considered an allegation of misconduct against Mr Jack Wicks (the respondent).
Friday 28th February 2020
Open-access content

Latest from 10

Pensions Regulator urges vigilance on ABC structures

The Pensions Regulator has urged trustees to examine asset-backed contribution (ABC) structures carefully and explore ‘less risky alternatives’ to support defined benefit pension schemes.
Tuesday 19th November 2013
Open-access content

NAPF issues revised corporate governance guidelines

The National Association of Pension Funds has set out new remuneration principles and more robust expectations for corporate accountability in its latest corporate governance policy and voting guidelines published today
Tuesday 19th November 2013
Open-access content

Mixed movements in October annuity market

The past month saw mixed movements in the annuities market as two of the top five providers offering standard, inflation-linked, and smokers’ annuity cover cut their rates, the Annuity Bureau said.
Thursday 14th November 2013
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Capital & Reserving, Nearly Newly

London (Greater)
Depending on experience
Reference
149031

Reserving Actuary

Dublin
Competitive
Reference
149027

Senior Analyst - Actuarial and Funding Risk

England, London
£60000 - £65000 per annum + bonus + benefits
Reference
149029
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ