Employers must do more and HR directors will increasingly be pushed into the pensions spotlight in a bid to minimise pensions complexity for staff, with the advent of auto-enrolment only a year from now.
These were the key messages at the National Association of Pensions Funds (NAPF) annual conference and exhibition in Manchester last month.
Mark Hyde Harrison, the new chair of the NAPF, the UK's biggest pensions body, attacked the structure of defined contribution (DC) pensions in the UK as "inefficient and wasteful".
He said employers are overlooking the needs of their staff because they - and pension providers - are not really batting for employees.
DC pensions have largely replaced final salary pensions in the private sector and five million employees have one. Their importance is set to balloon from next year, as Government rules will see workers automatically enrolled, bringing nine million new people into the system. Hyde Harrison said: "The current system is a mess. We must move from today's significantly flawed structure to a world of large, efficient, well-run and low-cost pensions, which are run in the interests of savers."
He said information on pension costs and charges is too opaque - both for employers running schemes and employees.
Setting out his vision for the future of DC pensions, Hyde Harrison spoke of a new breed of pensions called 'super trusts', which should be run on a larger scale. They would allow small employers to join an existing pension structure with thousands of other members, rather than set up more small-scale schemes.
The NAPF's chief executive Joanne Segars went one step further by challenging Government, employers and industry bodies to join forces to tackle complexity around pensions.
She said: "The current system isn't working. People are mystified by and fearful of the complexity of pensions. Yet the decision to save should be a no brainer.
"A Britain that saves for its future is a Britain with a future, enabling people to have a dignified, secure and fulfilling retirement.
"One of the exciting things about Government plans for pensions is its commitment to reinvigorate occupational pensions. But 53% [of conference delegates] do not think the Government is meeting its commitment.
"The world in which auto- enrolment was devised - full employment, low inflation and wage rises - seems like a cosy fantasy now. We live in times of economic turbulence. The retirement fortunes of our citizens are at stake."
She drew on NAPF findings revealing 60% of employees will join an occupational pension scheme after auto-enrolment - but this is a drop of 25% since 2007. Segars said employees are considering extending their debts to contribute to pensions and save for retirement.
She said: "I'm not sure that kind of robbing Peter to pay Paul is quite what we had in mind."
But the pensions minister Steve Webb (pictured with Segars) backed up Segars' sentiments. "I regard myself as the optimist of the pensions world," he said. "But my patience is running out. I don't want to read another bad news story on pensions. Auto-enrolment is going to happen next year. The pensions industry needs to get its house in order - and if it can't do this, I am prepared to legislate."
Also at the conference, pensions managers debated where their role fitted in business, reaching consensus it should "not be an obvious fit with HR, but at the same time integral to the HR function".
