Reforms to the UK pension system have long been called for. The word ‘broken’ is bandied around openly and it is widely acknowledged that sweeping change is a necessity. UK pensioners have been seeing returns from their funds that are among the lowest in the industrialized world and, as the number of Britons working and paying into the pension system drops, this problem will only grow more complex. 

Due to give his Mansion House speech in July, Chancellor Jeremy Hunt is predicted to outline wide-ranging plans to overhaul the UK’s pensions regime. The changes, which could include regulations that would encourage UK pension funds to invest and drive billions of pounds into high growth British companies, would ultimately seek to boost economic growth and set the country on a faster growth track. 

It is said that Hunt has closely examined a proposal entitled the Future of Britain Initiative, as laid out by the Tony Blair Institute, a non-profit established to provide government advice. This proposal outlines a plan that would allow UK defined-benefit (DB) schemes to voluntarily transfer to the government’s Pension Protect Fund, allowing it to become the country's first ‘superfund.’ The idea would be to then replicate this superfund, generating half-a-dozen globally scaled, professionally managed funds that would restore vitality and security to the pension sector. 

Nigel Peaple, director of policy and advocacy with the Pension and Lifetime Savings Association, welcomes any form of government consultation on the operational aspects of pension saving. With almost a fifth of working-age private sector employees in the UK neglecting to do any pension saving in any given year, alongside the majority of private sector pension participation in defined-contribution schemes facing considerably difficulty and risks in managing their finances through retirement, the case for policy review seems clear.