Pensions in the Age of Austerity

    October 2012

    How long has the UK pensions crisis been going on? Some might blame Robert Maxwell, Gordon Brown's ACT raid, the failure of Equitable Life, the introduction of FRS17 or the collapse of Lehman Brothers as the origin of all our pension woes. This paper is not about raking over the coals of pensions history to look for culprits, but about examining some current themes and looking forward.

    Pensions saving is at a crossroads: the brave new world of automatic enrolment, seemingly intractable problems of defined benefit funding, governance models and nervousness about savings adequacy are all live issues. Finding solutions to any one of these problems would be difficult in benign economic conditions, but unfortunately we are all painfully aware that this is an age of austerity, not luxury.

    Against this backdrop of austerity we asked pension funds, their sponsors and out fellow advisers in the industry for their views and opinions about what worried them most, where they will be concentrating their efforts and their thoughts on the future. We surveyed the readers of the leading pensions journals Pensions Insight and Engaged Investor and then conducted in-depth interviews with key decision-makers in the industry.

    We are very grateful to everyone who participated in the survey and interviews. The findings form our research, together with our thoughts on how to address the concerns raised are set out in this paper.