Pension sector ‘should learn ISA lessons’

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pensionsMany of us save into ISAs in order to stash away some cash in a tax-efficient manner.

And now an influential business group suggests that the UK's pensions sector could learn a thing or two from the popularity of the ISA market.

In fact, the Institute of Directors (IoD) has called for a simplification of the pensions system, in a bid to encourage us to save towards our retirement.

Its report indicated that in recent times, savers have paid twice the amount into ISAs as they have into pension pots.

Regulations have held the pensions system back, making it overly complex, the IoD believes.

While the 2009/10 period saw £43.9 billion paid into ISAs, the amount invested in pensions only hit £22.9 billion in 2009.

Malcolm Small, senior adviser on pensions policy at the IoD and the author of the new report, said: "The fact that so many people are either not saving at all for retirement or moving to other investment vehicles such as ISAs is a stark illustration that the current architecture has lost public confidence.

"If we are to avoid millions of people facing poverty in old age, then we need to give them an attractive structure to save into, not simply order them to save."

Confused about your saving options? Check out this feature to learn how ISAs work.

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