Who’s to blame for the pension crisis?

Pensions have become so complexthat even the Bank of England's chief economist, Andy Haldane, isconfused by them. "I consider myselfmoderately financially literate,"Haldane told attendees at the NewCity Agenda annual dinner in London."Yet I confess to not being able tomake the remotest sense of pensions."

This is a "desperately poor basis forsound financial planning". The rootof the confusion is the shift awayfrom company defined benefit (DB)schemes which pay a pension basedon criteria such as final salary and years of service towards definedcontribution (DC) schemes over thepast 20 years, says Haldane. This hasplaced investment risk "squarely onthe shoulders of the individual, ratherthan companies", since what you getwith DC pensions depends on howwell your investments perform.

His statement inspired a wave ofsupport, with The Daily Telegraphsubsequently launching a newcampaign to simplify the pensionssystem. But perhaps the real problemwith pensions today lies elsewhere,as MoneyWeek's editor-in-chiefMerryn Somerset Webb writeson MoneyWeek.com.

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The pensionsystem today whether DB or DC is actually remarkably simple.The problem is that the loosemonetary system of the last decadehas distorted the market so much thatsavers are finding returns increasinglyhard to come by. Who is to blame forthat? Well, we should start by lookingat the Bank of England.