Property News · April 27, 2013

The pensions system has failed – what is the answer?


Poor investment returns and dreadful annuity rates mean the outlook for defined contribution pension schemes is appallingTwo figures stunned me this week. The first was on Tuesday morning from the Office of National Statistics, which said that to buy an inflation-linked retirement income of £25,000 a year – less than the UK’s average salary – you would need to build up a pension fund of £763,900 at age 65. Sadly, the median amount of money held in a pension fund is just £53,000, only enough to buy an income of £2,700 a year at 65. The pensions outlook for millions of people saving in “defined contribution” (DC) schemes today is, quite frankly, appalling.Later in the same day, I was talking to a semi-retired police sergeant. He was 49 years old and had joined the Metropolitan Police at 18. He did not realise then that in the Willy Wonka world of British pensions, he was holding a golden ticket. At 48 years old, after 30 years’ service, his pension has come in at two-thirds of his £40,000-plus final salary, with inflation-proofing on top. So he is already on more than £25,000 a year for rest of his life, uprated in line with inflation, without having to do another day’s work. Continue reading…

Source : theguardian.com
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