Retirement Radio: The good news on pensions? Things are getting worse

The time is ripe for a radical overhaul of our pensions system, but it won’t happen until public anger boils over, says this month’s guest Robin Ellison.

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The state pension system is already far beyond the comprehension of most of us, but it’s only going to get worse with the arrival of auto-enrolment and NEST – the default scheme for employers unable to make their own arrangements for whatever reason – in 2012.

And NEST won’t be cheap. Setup costs are estimated to be between £600 million and £3 billion – not a small chunk of change in the current fiscal climate – and not everyone is convinced the computers will even work.

As Ellison, head of strategic development for pensions at law firm Pinsent Masons, explains to Steve Bee, ‘the fighting that must be going on, between the Treasury and Steve Webb at the Department of Work and Pensions, must be intense.’

What’s needed, Ellison says, is for politicians to stop tinkering at the edges of the pension system and let the civil service take a long-term holistic view of how things ought to work.

But it won’t happen ‘until the general public are sick to the back teeth of the pension situation and begin to revolt.’

Which, as Bee drily notes, means that the public money spent on ever more Byzantine legislation is money well spent.

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Steve Bee is managing pensions partner at Paradigm Pensions, and the brains behind jargonfreepensions.co.uk.