Financial certainty for thousands is wiped out
Published 17/11/2016 | 02:30
The purpose of a pension plan is to provide retirement income security for the remaining life of the pensioner. The principle is to eliminate the risk that the pensioner outlives their resources.
As Professor David Blake, the director of the Pensions Institute in the UK, says: "A pension plan is not intended to provide the resources for people to go on a world cruise when they retire, or even necessarily to pay off their mortgage. Instead its purpose is to provide them with the means by which they can maintain a reasonable living standard after they retire, and so avoid the need to fall back on the State or on other people in their final years."
The central tenet is based around the certainty of a worker knowing what income they will have in the latter days of their life when they become a pensioner.