A new report highlights the many fronts on which auto-enrolment pension provision is set to fail employees.
Written by pensions expert Dr Ros Altmann, Time for Change calls for a radical shake-up in pensions thinking, to fit the new realities of 21st century lifestyles and investment prospects.
Altmann pinpoints a number of areas in which the current arrangements are set to let workers down.
Age perceptions are changing: the report finds that most 50-60 year olds do not expect to feel 'old' before they reach their 70s; almost three in 10 do not anticipate it before their 80s.
Retirement expectations are also shifting, with most respondents expecting to phase the process by working part time for a while. "This means that gearing pension saving to a specific future date is not appropriate," says Altmann.
Yet 'lifetime' or 'target date' pension funds do just this, kicking in fully from a pre-set age.
Additionally, most pension default schemes are geared to the purchase of an annuity on retirement. Yet the survey showed fewer than one in 10 financial advisers would currently recommend buying an annuity because they offer such poor value.
If investors don't necessarily buy an annuity, then it doesn't make sense to move their money into 'low risk' assets such as cash and gilts in the years approaching retirement. Indeed, says Altmann, "this way of protecting pension funds before retirement has let many people down".
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First, such assets are not risk-free: "In the past year, an investment in government bonds could have lost 10% of its value as gilt yields have risen."
Secondly, they are unlikely even to keep pace with inflation. Consumer prices inflation for September stands at 2.7%, unchanged from August, and the Bank of England does not expect it to fall to less than 0.5% above the 2% target until 2015.
Altmann wants to see a move away from schemes and products geared to fixed retirement dates and automatic shifts into 'safe' bonds.
"Unless we address the inadequacies of the current pension fund default options and the scandal of poor value annuity provision, pensions are likely to disappoint," she stresses.
This article was written for our sister website Money Observer