Category: Finance for Contractors

Some form of compulsory pension scheme is needed, one expert has advised.

Reform of the pension system was inevitable, according to Gordon Forbes, managing director of Caledonia Asset Management, but there is more work to be done.

There is still a great resistance by many people to enter a pension scheme, and the last auto enrolment offering was an "unmitigated disaster", he said.

"I think that some form of compulsion is going to have to be [made] necessary because it's the only way to force people into promoting their own pension fund," Mr Forbes commented.

The issue is that taking out a pension requires advice and, as this costs, those on lower earnings will not be able to afford it, he warned.

"So the difficulty I think with any form of auto enrolment or a government-backed scheme is getting the message across and giving the individuals advice," Mr Forbes added.

The Department for Work and Pensions has announced measures to reform and repair the "outdated and inadequate" pension system such as restoring the link between the state pension and earnings.

Posted by John Crawley