UK. On pensions, the government has placed freedom over protection – but will it make us better off?
Many are choosing cash over annuities because they don’t think they will live long enough to get good value from an annuity, even though many would. In short, lots of people are making a financial mistake
The “pushmi-pullyu” in the 1967 film of Doctor Dolittle was a double-headed llama, with one head facing forward and the other back.
Pensions policy in the UK in recent years has borne a resemblance to this contradictory animal.
In 2012 the government introduced a “nudge” to encourage people to save for their retirement.
Rather than relying on workers to sign up to occupational pension schemes, the legal default became that everyone gets enrolled unless they deliberately opt out.
And all companies, above a certain size, also had to offer a scheme.
The result has been a surge in retirement saving, with the number of active pension scheme members up from 8 million in 2012 to 15 million in 2017.
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