A pensions expert has warned that the country’s pension system is doomed to fail unless bold reform such as raising retirement age to 70 years is initiated immediately.
The current pensions structure was unsustainable and pitiful for working-age, younger generations, said Malcolm Small, senior policy adviser at the Institute of Director, while speaking at a seminar organized by the Financial Services Research Forum.
The current approach has become irrelevant, said Mr. Small adding that pension age should be indexed to life-expectancy and raised to 70 years.
New pension structures should be modeled like ISAs than traditional ones, since the present system is complex and off-putting, and is unsustainable in face national debt and long-term care costs.
“The welfare state, including pensions, is not sustainable. It was designed against a number of assumptions that are no longer valid. One of those assumptions was full employment. One was a declining national debt”, said Mr. Small.
Mr. Small said employers’ attitude needs to change since people need to work longer and save more for themselves.
“We have got to accept that public and private pension systems cannot support a 30-year retirement from an effective 35-year working life. They were never designed to do so”, he added.
“We have all come to realise that everything Mr Small has said has to happen,” said Nick Lincoln, director of Values to Vision Financial Planning.
“But the caveat here is that Westminster needs to lead by example by reforming its own pension scheme to a full money purchase one and raising MPs retirement age to 70. Until they lead by example it will be very hard to make any changes”, he added.