The Royal Society of Arts, run by Tony Blair’s old adviser Matthew Taylor, has come out with a plan to rejuvenate the UK pension system. It builds on the government’s new pension initiative, whereby employees will be automatically signed up for a no-frills workplace pension in an individual account, which they can take with them as they move between jobs. But the RSA report’s author, David Pitt-Watson of Hermes Equity, says that people should be able to put in as much money as they like, not just the £3,600 annual limit proposed by the government which, says Pitt-Watson, makes the government proposal unviable and unsound.
The RSA report also says that these personal accounts have to be invested in safe assets, so that people can be reasonably sure that their savings will be secure for when they retire. And with that in mind, there should be only a limited number of providers, who can guarantee such exacting standards.
Personal and portable pensions with simple rules and no complications? It sounds like a great idea. And it is. That is why Chile did it thirty years ago, and why it has already spread to dozens of countries round the globe. And it’s why we did a report, The Future of Pensions on it as long ago as 1983.
It takes time for ideas to get through the sausage-machine of politics. But perhaps this is one that is just about to make it.
Now, if only we could get personal and portable health savings accounts too…