England shouldn’t celebrate
too soon in the Pensions World Cup
The English are understandably celebrating their FIFA World Cup wins over Panama and Tunisia, with their only a slight set back being a defeat at the hands of Belgium in their last game of the group stages. They have had an equally good showing in the Scottish Widows ‘Pensions World Cup’, ranking third behind only Australia and Denmark. However, England should not get carried away, says Bob Scott, Senior Partner at LCP.
While other pensions surveys consistently place countries like Denmark and Australia near the top of international league tables, let’s take a closer look to assess whether England’s recent form warrants a position as high as third.
The Pensions World Cup mirrors its footballing namesake, meaning that 32 countries compete for the ultimate crown.
Some countries with strong pension systems failed to qualify for the football tournament, meaning England gets an easier run in the pensions equivalent than it might have done had it been up against the likes of the Netherlands, Norway or Canada.
England has perhaps also had some luck with the draw in finishing ahead of countries like Sweden and Switzerland. It might have to be wary of the VAR overturning this decision after close scrutiny, with both Sweden and Switzerland known for having efficient and sustainable pension systems. However, you’re only as good as your last match, and England’s recent form in the pensions world – for example the rises in minimum auto-enrolment contribution rates – has helped it to establish a slender lead.
Scottish Widows draws some sound conclusions from its pensions tournament – notably that auto-enrolment should be inclusive for more workers and that the minimum age for auto-enrolment should be brought down to 18 more quickly.
Despite the government’s lukewarm response to the concept of a “default retirement pathway” as proposed in the recent Select Committee report, more work needs to be done to find viable products that allow people to access their retirement savings sensibly once they stop working. In addition, despite growing evidence that life expectancy isn’t increasing as quickly as previously thought, the government should think carefully before deciding to defer increases in the State Pension Age if the burden on the millennial generation is not to become unmanageable.
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