Pension pots fall by 60% over last decade
Research by Life and Pensions shows the true problems within the UK pensions sector with the average personal pension pot having fallen by 60% over the last decade. While some of the fall can be attributed to the dot-com boom at the start of the last decade, which may well have artificially inflated pension pots, there is no doubt that the recession, changes in the tax regime and the longest recession since the 1930s have hit pension funds hard.
The report also shows that the situation could have been much worse if it had not been for a 22% increase in pension fund values during 2009. However, those in the UK nearing pension age and planning ahead will need to substantially increase their pension fund contributions to achieve a standard of living anywhere near what they may have expected a decade ago. There are also issues regarding the annuity market where rates have fallen by around 20% since the turn of 2000 which adds further insult to injury.
All in all there is no doubt that the UK pension arena is struggling at the moment and investment returns over the last few years have had a major impact. The level of disposable income available in the UK is also under pressure and more people will struggle to fund their future pension pots.
Scottish & Southern hikes energy tariffs
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Rally in sterling comes to an end
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How will you cope in retirement?
As the UK population continues to live longer there is a growing need to reassess and restructure the UK pension system and assistance for those in retirement. As we have seen over the last few weeks, more and more final salary pension schemes are closing to new members and indeed many are transferring to money purchase schemes with significant bonuses for members who agree to the move. In some ca...Read More