Occupational Pension Funds: Getting the Long-Run Answers Right

The impact of the British government's new proposals for personal portable pensions and of the parallel reduction of the benefits in the state earnings-related pension scheme are examined in the light of historical evidence on the behaviour of pension saving. Defined contribution pension schemes are forecast to become more popular, against the currently dominant defined-benefit schemes. The present inflation-proofing for the vested rights of leavers may prove inadequate. The risk to pension plan members of fund insolvency may rise to United States levels as competition in the industry increases. Costs of running the more flexible new system will rise. A wider range of financial services are likely to be retailed through pension funds, particularly if tax subsidies are not re-assessed.Defined-Benefit Schemes; Defined-Contribution Schemes; Fund Insolvency; Inflation; Pensions