The latest TUC Economic Report, published today, finds that the UK economy remains unbalanced, particularly in terms of an over-reliance on the financial sector. As millions of workers are automatically enrolled into insurance-based defined contribution schemes from 2012 onwards, the City is set to receive another significant stimulus, funded by individual savers, their employers, and the government in the form of pensions tax relief.
As noted in the report,
in the year to June 2012… GDP fell by 0.8% whilst manufacturing output fell by a far steeper 3.1%. In contrast, the output of business and financial services rose by 0.8%. While without this growth the fall in GDP would have been even steeper, this trend does raise worrying questions about the shape of our future economy.
The report therefore offers a timely opportunity to reflect on the dependence of automatic enrolment – which will extend pensions provision to millions of under-pensioned workers and is therefore welcomed by the TUC – on financial services. One area of particular concern is the governance of contract-based pension schemes, or more precisely, the lack of governance in such schemes.
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Image: Pensions Insight