Report calls for overhaul of pensions system

A report has called for the UK's pension system to be given an overhaul in a bid to increase the number of people joining schemes.

The Institute of Directors report said that if the system is to be brought in line with ISAs as a savings option then a radical overhaul is needed.

The report called for the pensions system to be made more simple for consumers to understand, saying its complexity makes pension schemes less appealing.

Figures showed the amount being paid into pensions was outstripped by that for ISAs in recent years. The report said the numbers showed a shift towards Isas among the public.

Contributions to employee and individual pensions fell to £22.9 billion in 2009, while during 2009/10 people paid £43.9 billion into Isas - up from £35.7 billion two years earlier.

The report also urged ministers to look into increasing the state retirement age to 70 by 2044. Current Government plans will see the retirement age reach 68 two years later, in 2046.

Malcolm Small, senior adviser on pensions policy at the institute and report author, said: 'The fact that so many people are either not saving at all for retirement or moving to other investment vehicles such as ISAs is a stark illustration that the current architecture has lost public confidence.

'If we are to avoid millions of people facing poverty in old age, then we need to give them an attractive structure to save into, not simply order them to save.'

Copyright Press Association 2012