In the UK we are seeing a shift from Defined Benefit (DB) pension plans to Defined Contributions (DC).  Can't be any harm in shifting the burden from schemes/sponsors and transferring it to members, right?

The 3 minute video below suggests otherwise, as the Superintendent of Pensions in Chile talks about what other countries can learn from recent Chilean reforms.

Chile opted for DC schemes over 25 years ago, yet it proved to be no pensions' panacea. 

Why?  It seems many citizens did not know of the change, let alone start contributing!

Auto-enrolment into UK corporate pension schemes is due to take effect next year.  Estimates for employees opting out of their respective scheme range from 25% to 50% – can we avoid a Chile-style crisis in 2-3 decades?? 

[Please note that all opinions expressed in this blog are the author’s own and do not constitute investment advice.  Click here for full disclaimer]

Author: Gurjit Dehl

Gurjit used to be the editor of RedBlog and Creative Economist at Redington.