Five Questions On: The pensions crisis

 

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The Independent Online

Is this about another scandal?

If you believe it's scandalous that almost half of us have made no pension provision, then yes it is. It means millions could be heading for a future pension crisis despite consistent government attempts to ensure workers do start saving for their retirement.

Who says half of us have no pension?

The figures come from research published this week by the Chartered Institute of Payroll Professionals (CIPP). Tellingly, almost half of those surveyed said they know nothing about the recent work-based pension reforms or the drastic changes announced in March's Budget. Fewer than a third say they have a pension fund offered through their employer, while only one in 10 have a private pension.

Why does this matter?

As Lindsay Melvin of the CIPP pointed out: "The lack of awareness surrounding the new system, coupled with the fact that such a significant amount of people don't have any form of pension, will have a huge ripple effect later down the line. Some people may even find that they can never fully retire if they don't give their pension provision serious consideration."

Really? I won't be able to retire?

Not in the manner you expect, if you don't do something about it. The majority of people say they expect an annual pension income of between £20,001 and £35,000, but do not realise they would need to start putting aside at least 12 per cent of their salary each year from the age of 22 to achieve that.

Crikey. So I should take action?

Yes. You need to save as much as possible as early as possible if you hope to be able to enjoy your retirement, no matter how far away it is. If you work, talk to your employer about its workplace pension scheme as soon as you can.

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