Pension market reform is overdue. Existing arrangements prioritise concepts such as safety and value for money that were crucial for legacy defined benefit schemes but give little emphasis to the outcomes for defined contribution plans, the now dominant vehicle for today’s generation of pension savers. As the Chancellor readies for reform, Christopher Mahon, Columbia Threadneedle’s Head of Dynamic Real Return, Multi-asset, has co-authored a paper Growing Pension Capital with James Vitali, Policy Exchange’s Head of Political Economy, setting out what might be learnt from Australia’s approach.
Their analysis estimates that typical savings pots could be boosted by some £12,000 by adopting an Australian style focus on outcomes. And the biggest beneficiaries would be the pre-retirement cohort, the group most disadvantaged by the current approach.