It is no secret that the UK pensions market is on the precipice of a major transformation. The seismic shift from defined benefit (DB) to defined contribution (DC) schemes continues unabated, accelerated by ongoing initiatives such the introduction of auto-enrolment, around which the dust is still settling. Added to this is the government’s overhaul of the annuities market, introduced via sweeping reforms that took effect in April. Retirees now find themselves with far more freedom and choice regarding how they can access their retirement pot.
New as all this may be to the UK’s green and pleasant shores, it is not uncharted territory. Australia, in particular, has journeyed down a similar path. Once weighted in favour of DB solutions (much like the UK more recently), now approximately 90% of the assets within its pension system are in DC plans. Radical as our annuity
reforms may seem to us, Australian workers have enjoyed similar freedoms for decades.
As the UK market braces itself for change, it is instructive to look to antipodean experience for guidance and insight into how the market will evolve in response, and the challenges that may arise.
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