Pensions - Articles - Comment from PwC on plans for Dutch-style pensions in the UK

 PwC comments on the pensions minister’s outlined plans to introduce Dutch-style collective pension schemes to the UK market.

 Peter McDonald, pensions partner at PwC, said:

 “While in theory collective investments should produce better outcomes for savers, in practice the picture is more complex. The challenge will be to manage people’s expectations and be clear that collective investments bring no guarantees. While many people currently trust the Dutch system to deliver more favourable outcomes, it’s equally possible that many could be left disappointed with final pensions that don’t meet their expectations.

 “It must be clear who pays the cost for what, including when payouts are not in line with set expectations. Without this clarity and simplicity, the Government’s intended aim of creating a strong savings culture and restored trust in pensions will not be achieved.

 "While we need to encourage a pensions system that improves outcomes for members, a copy and paste of the Dutch system is not necessarily the right answer for UK workers. The Dutch system was designed for a different generation; any transformation of the UK pensions system needs to be fit for tomorrow’s workers. This should include exploring a system that can cope with people releasing money early, a greater number of changes of employer, and gaps in employment.

 “Although employers may not jump at the chance to take on more risk compared to defined contribution pension schemes, this could be a real differentiator for companies wanting to attract the best people in the future as defined benefit pension schemes become a thing of the past.”