Pension system ‘needs overhaul’

The UK’s “failing” pension system needs to be overhauled and simplified to make it as attractive as saving into Isas, a report from the Institute of Directors said.

People have been paying around double the amount into Isas as they have into pensions, starkly highlighting which type of savings they prefer and showing how public faith in pensions is dwindling, the report argued.

It said the current pension system has become complex and unattractive, having been bogged down by a “forest of regulation”.

The amounts paid into Isas rose from £35.7 billion in 2007 to £43.9 billion in 2009-10, while employee and individual pension contributions peaked in 2007 at £25.6 billion and had fallen back to £22.9 billion by 2009.