A bold statement for sure, and one worth examining since, as always, pensions are being used as a plaything by politicians and technocrats in the UK and rarely to the benefit of the poor scheme member.
The personal pension came into being in 1988 in a blizzard of contracting-out carrots and governmental "look after yourself" sticks.
They have been fiddled with, raided and hacked at ever since. Yet in spite of the chop and change, there are still 18 million pension pots, according to the Pensions Regulator, containing nearly £500bn in retirement savings. It seems too big a sum of money for avaricious politicians to ignore.
Between 1997 and 2004, according to the perennial pensions posterboy Frank Field, the then Government was running more committees of inquiry into the subject than all the similar ones since the Second World War and it has hardly let up since. What is to prevent further tinkering?
This was from the same Treasury headed up by Gordon Brown who raided private pensions and abolished tax credits almost before he walked through the door as Chancellor – immediately trousering an estimated £5bn for the public coffers. What would that be worth in terms of lost growth for the private pension holder today?
The question is particularly pertinent in an age where there are so many alternatives for tax-efficient savings.
ISAs with an £11,520 tax-exempt limit and the increasingly popular but more complex SIPPs (Self-Invested Personal Pensions), for example. The advent of auto-enrolment also adds colour to the argument.
Hargreaves Lansdown’s ever-present head of pensions research, Tom McPhail, argues several points in his thorough proposition that it is time for the personal pension to retire.
High charges, although they have reduced drastically over the years and have become more transparent – particularly since RDR (the Retail Distribution Review); poor performance; and heavy penalties for switching are chief among them.
"Personal pensions revolutionised retirement saving for millions of investors, allowing them to take ownership of their own retirement provision for the first time," said McPhail.
"However, results have been pretty mixed and whilst some schemes have done well, for many they have failed to live up to expectations. With auto-enrolment now putting greater emphasis on saving through the workplace and with low-cost SIPPs offering better investment choices and access at no extra cost, it may be time to retire the personal pension plan."
And scandal, lots and lots of scandal – Equitable Life anyone?
There was mis-selling to 1.2 million people – of whom I was one – costing £13bn in total. We were encouraged to contract out, so I did, aged 20 in 1988, and paid in a small sum of money each month for several years, though not since 1999.
As for performance, I received the statement for that this week from NPI. In the 12 months to the end of May my £23,000 pot increased in value in the last year by £830. Over the same timeframe the FTSE 100 (bid-to-bid income reinvested) put on 28.41 per cent. I take his point.
I have three other employer-backed schemes, all of which have performed considerably better but leave me with messy arithmetic and mixed performance.
McPhail also argues lack of choice in providers points to a slow death for the humbler personal pension. In 1988 there were 50 providers, he says, while today there are fewer than 10.
One of them, LV=, has the same answer to the most recent FE Trustnet poll as most of our readers. Ray Chinn, head of pensions and investments, says, yes, it is.
"A pension remains one of the most tax-efficient vehicles for people to use to save for retirement."
"When choosing a pension, it may be tempting to select one on the basis of cost but, as with most things in life, cheap may not equate to good value. There are numerous low-cost pensions available in the market and now that the Retail Distribution Review is in force, pension charges are more transparent."
"However, it is important to look at the product features: is there a charge for moving your pension to another provider? Will it allow the use of income drawdown further down the line?"
"To ascertain the pension that best suits your needs, consider how often you will change your investments and how much they will be worth."
Patrick Connolly (pictured), a certified financial planner with Chase de Vere, veers toward the bigger picture.
Quite simply, he says: "As a nation, we are not saving enough for our retirement and we are living much longer than we used to."
"For most people, the best approach for long-term savings is a combination of pensions and ISAs. Pensions provide initial tax relief, which gives your savings an immediate uplift, but they are inflexible, whereas ISAs can still be tax-efficient and you are able to access your money whenever you like."
"The right balance between ISAs and pensions for you will depend upon your own personal circumstances, including your tax position and other investments you hold, your financial objectives and how important it is for you to be able to access your money."
Not everyone agrees in this increasingly lively debate.
Henry Tapper, director at First Actuarial, says: "Investing in a private pension was never a great idea unless there was a substantial employer contribution or an insurance guarantee – such as the guaranteed annuity rates offered by Equitable Life (and others)."
"Manufacturing costs have been exorbitant, as we are finding out retrospectively, the decumulation options are archaic and the cost of distribution so high that the total costs of many personal pensions make real growth almost impossible."
"The structural deficiencies of personal pensions were hidden till recently by the high growth from equities in the boom years. Today, those relying on these plans are discovering the toxic cocktail of low growth, depressed gilt yields and increased longevity expectations."
"Despite recent improvements in administration, investment solutions and "at retirement" guidance, personal pensions remain a second-class solution."
Rob Gleeson (pictured), head of research at FE, says: "In my view, there isn’t a lot between a pension and an ISA wrapper, it is perfectly reasonable to use an ISA for the purpose of retirement, though a pension in the form of a SIPP does at least have some advantages."
"For a start you are locked in, so there can be no temptation to spend your pension pot, there is a much higher cap on contributions and fewer restrictions on investments – for example, US-listed equities would be eligible for tax relief in a pension, but not in an ISA." So it is the alternatives that continue to feature heavily in the retirement mix among the professionals.
Robert Reid, managing director of Syndaxi Chartered Financial Planners and a former president of the Personal Finance Society, says: "Pensions still have the edge because tax relief for those wishing to save for an income works, but if saving for a lump sum then an ISA may be superior. As ever, it is all a matter of personal requirements."
So as I bid to untangle my 20-year-old melange of pension pots into a SIPP, can it be that everyone is right, and that with sleeker, more transparent alternatives available for the private investor, the simple personal pension is indeed showing its age?
