Incoming government 'must tackle' pensions

A PENSIONS expert has called for the next government to establish an independent commission to find answers to the country's looming retirement crisis.

Fraser Smart, a director at Buck Consultants, said the newly elected administration needed to take brave decisions over how to prevent a pensions catastrophe as concerns grow over deficits and insufficient personal pensions savings.

Smart is calling on the political parties to address the crisis before it is too late to help those who are facing prolonged working lives and limited budgets in retirement.

Smart told Scotland on Sunday: "It's often political suicide to tell people what they don't want to hear, but there's not enough money in the system and we are already having to pay higher taxes to fund a large public deficit.

"At a high level you need an independent commission to look at this impartially and apolitically. This affects everyone and it's going to affect the next two generations."

Smart's comments come a day after research revealed that company final salary pension schemes, which have been on the wane in recent years, are likely to be extinct by 2019 – if not sooner.

The survey of 251 UK companies reveals that the financial crisis has hastened the move away from final salary pensions to defined contribution schemes, where employees and businesses typically pay in a set amount each month but no particular sum is guaranteed upon retirement.

Smart said the death of the final salary scheme in the private sector could even happen in the next four years.

He also urged companies to take a more active role in educating their workforce about their pension plans as the vast majority of employees don't understand what they are paying into and what they may or may not receive upon retirement.