CorleyI agree, we have a low provision rate which further decreases with lower income groups and people are put off by complexity, lack of accessibility, jargon and a fear of making the wrong decision. How would you suggest to make saving more attractive?
OerlemansIt’s the governments’ task to make people aware of the importance of financial planning. Governments across Europe need to do more in this regard, and the asset management industry should also assume greater responsibility in helping people prepare financially for their future.
Pitt-WatsonTo make retirement saving more attractive, we have to start with auto-enrollment through employer schemes. It helps keep the costs down and allows pension benefits to increase.
CorleyKeeping costs low is important, as employers must be willing to offer schemes. There is a tendency to focus on workplace pensions, for example the National Employment Savings Trust (NEST) in the UK, and although this is very admirable, employers have to be comfortable the scheme fits in smoothly with the wider compensation and benefits system they are offering.
Pitt-WatsonThat is why we need a consensus, particularly for smaller companies. We need to agree on auto-enrollment, albeit with an opt-out option, and we have to make it transparent for savers. They need to know what the investments will be and what the charges will amount to. With the legacy of defined benefit (DB) still lingering and employers’ understandable reluctance to commit to further DB liabilities, we need a sensible debate about what scheme is best suited to replace DB, and we need it now. In the UK, a lot of people will be extremely disappointed with their retirement income, yet since that problem doesn’t present itself for another generation, politicians are willing to leave it alone.