I love Holland but are their Collective pensions better than ours?
Collective funds pool all contributions into one big fund, so the administration costs are lower and pensions are paid from the fund rather than having to buy annuities.
By running funds collectively rather than individually (the British model) costs are reduced.
Some experts suggest that savers will increase their investment returns by 30%.
An article in the Telegraph 3rd June 2014 commented…
What is certain is that the schemes are a long way from the final salary “gold standard”. There are no guarantees, not even the certainty of a fixed income that you get with an annuity. You may get inflation-linked increases, you may not.
Assuming that these schemes do become available in the coming years, the best course for most workers would probably be to use them for some, not all, of their pension savings, with the rest in traditional schemes, self-invested pensions or Isas.
But will they ever see the light of day? There is little incentive for companies to back them – finance directors remember what happened with final salary schemes, which drove many firms to the brink of bankruptcy thanks to endless “gold-plating”.
So will your pension be going Dutch?
steve@bicknells.net
