Pension planning is vital for so many.
DESPITE THE constant talk about the need for retirement planning and Government initiatives on the pensions front, more people than ever before face financial hardship when they halt work.

These are the findings of a survey by Fleming Asset Management, the investment trust and pension provider. They show that, since 1996, when the company carried out its last survey on the same issue, the number of people who would be badly off at retirement has grown from 10 million to 13 million.

The perception by individuals that they will be worse off in retirement also appears to be growing: whereas 62 per cent of people surveyed in 1996 felt they would be better off, this dropped to 51 per cent three years later.

Ian Overgage, marketing manager at Flemings, says: "Even with the Government's proposals for lower earners announced in the recent Green Paper, the vast majority of people will still not benefit. People who are earning a decent salary simply cannot rely on the state."

Fleming's research also shows that the number of people aged 50 to 59 who will be entering into retirement in financial hardship has doubled to 1.2 million since 1996. This is caused by sharply falling annuity rates, which will reduce substantially the payout to be expected from maturing personal pensions or so-called money purchase schemes. Actuaries are adjusting their annuity rates downwards to compensate for the fact that people now live longer, on average.

In particular, self-employed people are likely to be hit hard. In 1996, some 54 per cent were not putting enough into their pension, a figure which grew to 64 per cent in 1999. This compares with 44 per cent of employees who are not making enough provision for their future.

Women taking career breaks are affected too: a failure to invest in a pension while bringing up children can have a disproportionate effect on retirement income. This is because money invested at a early point in a career has the opportunity to grow for the longest period of time before retirement - or not, if a person stops work to raise a family.

Flemings has produced a free guide to pensions, which explores the issue of how to plan for a financially secure retirement. Call 0500 500161