Letter Printed in Financial Times 4 April 2003

by Dr. Ros Altmann

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The Editor
Financial Times
Number One
Southwark Bridge
SE1 9HL

2nd April 2003

Sir

I read Martin Wolf's excellent comments on our final salary scheme 'pensions lottery' (March 31).  The UK pension system certainly is defective.  Unless an insurance scheme is introduced, employees should think very carefully before increasing contributions into their company scheme.  They could lose all of it, if their employer fails.  This can be likened to recommending them to put their retirement savings into one share on the stock market.  If the company goes bust, they may lose all their money (and their earnings too).  Our system must offer proper protection (at least up to some maximum level) for the rare eventuality of employer insolvency.  Members must be properly warned about the risks to their contributions.  All other financial products carry a risk warning - if contributions are not safe, members have a right to know.  Crossing fingers and hoping the markets will recover is no way to run a pension system. 

Yours,

Ros Altmann
Governor London School of Economics


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