Pension Reform in the United Kingdom
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A long road lies ahead for pension companies that must comply with new pension reform regulation in the UK. With the initial deadline known as A-day looming, companies need to get a handle on implementing changes.
will take a big step forward on April 6, 2006, when a new simplified tax regime takes effect, a day known as A-day. Celent traces the steps leading to this day and explores the numerous IT challenges that pension reform presents in a new report, .
There has been considerable debate about Europe's impending pension crisis, which the UK has not escaped. The UK started down the challenging road to regulatory reform of the pension system in 2002. With A-day just months away, the UK is preparing to cross another bridge that may help to prepare companies for future changes. "A review of how insurers are dealing with A-day is a great way to learn how best to tackle the changes that are coming in the future," says Catherine Schmitt, senior analyst and author of the report.
The impending overhaul of UK pension regulation will require pension companies to make extensive changes to their IT systems. Core systems such as policy administration systems and claims systems will be at the heart of these changes. And work in these areas will be further complicated by a myriad of legacy systems, inflexible architecture, and multiple systems by line of business. "As pension companies come to terms with changes required for A-day, they can be assured that this is the beginning of a long and bumpy journey of change," says Schmitt.
Some Key Facts About Pensions in the UK
|2:1||Worker to pensioner ratio in 2050. Currently, this is 4:1|
|56%||Increase in number of pensioners by 2050|
|60%||Estimated percentage of people who are undersaving|
|｣65 billion||Deficit in occupational pension schemes of FTSE 100 companies in 2005|
|Source: National Association for Pension Funds|