Keep expanding on vital pensions issue

Hoping the Guernsey Press will continue to expand on this vital issue.

It appears Social Security has decided in advance of discussions that a secondary pension should be based on a to-be-decided, fixed framework.

I found the consultation paper on the subject totally inadequate but completed it nonetheless.

Historically the private retirement/pension provision sector has, like banks, lost all trust. What is already a horrendously complex sector has not been helped by recent changes in the July UK Budget, with early access option and without the need to buy an annuity; which, true to form, is also receiving serious complaints relating to lack of tax advice and, once again, excessive charges. So if the proposed secondary pension is to be run by the private sector, overlooked by Social Security, a great deal has to be renegotiated.

Social Security appears to believe that once decided, a fixed policy will fit all.

I feel there is a need to move away from all the existing preconceived and complex pensions formats and replace with a simple, flexible savings plan where individuals contribute according to their current means (with possibly an employer input option) and benefit from investment expertise, economies of scale and minimum charges.

Charges in place in the 1970s onward were acceptable when returns were 11%/13%/16% – (gilts of 17% 18% issued at the time), but are unacceptable and unworkable in an area of low rates if the aim is to be achieved.

Due to the massive expansion in money in circulation caused primarily by QE, much lower rates should be workable.

Rescuing the already-existing Guernsey Rats scheme by launching a flexible and jointly run States/private sector one might offer a simpler solution with a chance of belatedly turning around the disastrous and appalling record in far too many cases and thereby become the secondary pension provision.

I note you mentioned we could learn something from the UK Workplace Pension Initiative. At the very least, the groundwork is in place and could be modified to suit. Although the scheme commences with contributions from the biggest employers moving on to smaller and contributions are graduated starting with 1%, I have reservations regarding compulsory employer contributions and the effects on employment for Guernsey businesses outside of finance and allied industries.

Also, for those on lower income, the contributions have a greater impact on living standards with a strong possibility that, after years of enforced thrift, finding joint first and secondary pensions places them just a few pounds above supplementary support entitlement.

Name and address withheld.