The U.K. should make saving into an occupational pension fund mandatory, according to Laurence D. Fink, CEO and chairman of BlackRock.
“NEST and auto enrollment have made a marked difference,” Mr. Fink said, referring to the £42 million ($70.3 million) National Employment Savings Trust, London, while speaking to delegates at the annual National Association of Pension Funds investment conference, held in Edinburgh. “Two million people are saving for a pension; by 2018, that number will rise to 11 million.
“But … these steps are just not enough. We need people to save more and save earlier, which will have an impact on the GDP of an economy. There are trade-offs to what I'm saying.”
Mr. Fink said he was echoing what he has already recommended for the U.S. market. “I would recommend making an appropriate level of retirement savings mandatory here in the U.K. for both full- and part-time workers, without the option to opt out.”
He referred to Australia's superannuation plans, which carry mandatory savings requirements, and have “proven effective.” “Even 1%, 2%, 3% or 4% mandatory … I think that is a better (idea) than raising the minimum wage” in an effort to increase retirement income.
One delegate asked Mr. Fink for his take on the Scottish referendum, a Sept. 18 vote that will decide whether Scotland should become independent.
“Our first office outside the U.S. was in Edinburgh (which opened in 1996). If there was a “yes” vote in September, I would ask my employees 'what does it mean for you?' And I would ask my clients in Edinburgh 'what does it mean to you?' If it means nothing to my employees and clients, it means nothing to me,” Mr. Fink said.