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