Prince of Wales voices concern over Britain’s pension system

Prince of Wales voices concern over Britain's pension systemPrince Charles has expressed doubt England’s pensions are built to cope with the country’s ageing population, and warned fund managers to move beyond the short-term thinking which typifies the sector.

Speaking at the National Association of Pension Funds conference held in Manchester, he said he was apprehensive for the UK’s young, who risk facing a “miserable future” if the industry fails to adjust to a soaring older population and its effect on the environment.

The Prince specifically condemned the current system’s focus on quarterly profits – and stipulated it will not work for Britain’s aging population as pension liabilities will stretch out over many decades.

Ultimately, he called for fund managers to “shape a system designed for the 21st and not 19th century,” contribute to long-term stability, and “preserve the real value of beneficiaries’ retirement income”.

This sentiment echoes former UK Government Adviser Ros Altmann’s recent reflections; specifically his statement that pensions are “fit for the past, not for purpose.”

What the figures show

The Prince’s comments, which were recorded on the 25th of July but only released online on the 16th of October, focused on the uncertainty of today’s financial, environmental and social climate – pointing out the unprecedented levels of debt and the UK’s rising population.

The number of individuals over the age of 65 is predicted to rise to 19 million by 2050, and the average 65-year-old in Britain is now expected to live until 84.

Currently, only one in four over-50s are planning to retire at 65 – principally due to a lack of savings.

Meanwhile, the Office for Budget Responsibility has stated the growing elderly population will see state spending on pensions, healthcare and social care rise from 14% Britain’s national income to a mammoth 25%.

During his speech, the future king stated that there is mounting evidence that business which responsibly tackle environmental and social challenges are the ones more able to deliver long term returns.

The Prince called on firms and fund managers to think about this evidence; questioning “is there not a case for ensuring your portfolios are resilient in the long term?”

A rare foray

The speech was a rare foray into economics and high finance by the Prince, who cannot become involved in political issues, but often speaks out for environmental causes.

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