Change needs to come in the retirement savings sector, Dr Ros Altmann said in a new report.
Economist and former government adviser Dr Ros Altmann has said that the "blind faith" in the global stock markets shown by pension fund managers must be reconsidered.
A new report from the expert suggests that pension savers would be better protected in future by their fund managers moving away from stocks and shares and into other financial products. Dr Altmann's comments come in the wake of a plunge in stock markets around the world, caused by the credit crunch.
The FTSE 100, the London Stock Exchange's flagship index, lost around 35 percent of its value over 2008 as the financial crisis translated into a sharp downturn in the real economy. While the index has risen by around 1,000 points since early March, it remains over 30 percent below its 2007 highs.
As most pension funds are heavily exposed to the stock markets, people who retired recently - along with those set to retire in the near future - are likely to have faced a corresponding drop in the value of their pension pot. In her report, Dr Altmann argued that this should cause a fundamental shift in habit among the fund managers.
"There has been far too much 'blind faith' in stock market returns and not enough emphasis on security of income for older members of society," she said.
"We have to re-think our whole approach to pension saving and be honest with people so they can understand the need to differentiate between the minimum security aspects of pensions and aiming for high investment returns."
Dr Altmann's report was conducted for financial firm MetLife.
