It is fairly well known that in the UK as in many western countries, our ageing population (the baby-boomers are getting older) will lead to problems with how the country can support the increased proportion of pensioners in the future – the “Pensions Gap”.
Lots of people are suggesting solutions, some more radical than others. For example, in a recent report for the CII (Chartered Insurance Institute) titled “An age-old problem: developing solutions for funding retirement”, Ros Altmann suggests that pensions need an image makeover –
“The word ‘pension’ often has negative connotations nowadays. It conjures up the image of being old, which many people resist…we should abolish the word ‘pension’ for anything other than what the state pays people in their old age.”
As one solution she suggests that the Government could create a £1 million monthly lottery for people who put aside money every month to save for their retirement.
Commenting on this suggestion, Ed Bowsher at Lovemoney.com has some other ideas. One option is to allow people to release pension funds at an earlier age. To “Unlock the Box” as he puts it –
“When you save into a pension, you can’t get access to your money until you’re 55 at the earliest. That’s a good thing in some ways as it means you can’t fritter your pension away on an expensive holiday when you’re 40. The ‘lock box’ forces you to be prudent with your retirement savings.
Trouble is, I suspect the lock box puts lots of people off from saving for their retirement at all.
I think we need to allow savers to access their pension pots at a younger age. Or at least a portion of their pots anyway.”
It will be interesting to watch what other ideas for reform start to surface, as the ticking of the “Pensions Time-Bomb” gets louder!