Three foreign pension lessons for the UK – PPI report
The Pensions Policy Institute’s (PPI) latest report looks at what the UK can learn from other countries to improve value for money for pension savers. Such contries, among others, include Sweden, Australia and the Netherlands.
When Sweden introduced its defined contribution (DC)-based premium pension system in the 1990s, it launched a campaign to encourage workers to make an active, considerate choice between the six available investment funds.
With remarkable success, as two thirds of workers did indeed make an active choice in 2000/01, the first years the new system was running. But with the withdrawal of the campaign, the share of active choice quickly fell to 10%. Now, just 1% of new pension savers make a considerate choice for an investment fund.
“This suggests that effort needs to be both concerted and continuous,” the PPI concluded. As this would be costly and time-consuming, it’s not sure this would be a preferrable option, the research institute added.
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