Home in on a way to save our pensions
Sunday 31 July 2005
There's something in the air. Like summer storm clouds that threaten a downpour, the atmosphere is thick with oppressive expectation ahead of Adair Turner's recommendations on Britain's £57bn retirement savings crisis.
The pressure is almost unbearable but there's an awful long wait ahead, for Mr Turner's Pensions Commission might not report back until the end of November. In the meantime, members of the UK financial services industry are trying to pre-empt its conclusions and advance their own theories about what should be done.
Last week, the Association of British Insurers pitched in with a policy paper for Mr Turner's attention.
To help the millions of savers who have a handful of small, disparate private pension pots amassed over the course of a working life, it wants a simple pensions "transfer mechanism" that cuts away all the fees and administration that can deter workers from moving their money into one place.
Prudential, meanwhile, unveiled plans for a new equity-release product (see back page), to help pensioners boost their savings. It believes that this method of releasing cash from your property will be one of the big things in finance over the next decade.
Others, such as the independent financial adviser Hargreaves Lansdown, believe savings salvation lies with the self-invested personal pension (Sipp), a DIY retirement plan that lets you choose which funds you invest in. From 6 April 2006, you will be able to put Sipp savings into residential property, art or even wine.
All the while, company pension schemes struggle to cope with their own funding problems.
Another nail was hammered into the coffin of final-salary schemes last week when insurer Royal & SunAlliance revealed that, as a cost-cutting move, it was to restructure the pension offered to its own staff.
Instead of payouts depending on their final salary, employees retiring from January 2006 will now have their pensions determined by their "career average".
If you're trying to plan for retirement, you could be forgiven for scratching your head. For when the industry is looking in different directions, where does the man in the street stand?
How Mr Turner will try to solve all this is unknown. All we can be sure of is that there won't be a single "magic bullet" that disposes of the problem at a stroke.
We may, as seems likely, end up with "auto enrolment", where workers are co-opted into an occupational scheme unless they make the effort to say otherwise. The obvious alternatives, higher taxes or working longer, might prove more unpalatable.
The biggest question mark, however, is placed next to our homes: what will Mr Turner suggest for property? Will it - or should it - have a role as part of pension planning?
The idea that bricks and mortar could be a solution to the £57bn long-term savings gap offers both potential and peril. The financial reserves to be tapped are enormous - more than £1,100bn of unmortgaged wealth is locked up in the homes of the over-65s, according to the Institute of Actuaries. That's very difficult for Mr Turner to ignore.
But schemes such as equity release, which let owners tap into that wealth, are, so far, less than satisfactory and carry plenty of dangers.
There must surely be a lower-risk way to let homeowners benefit from what is often their only asset. The industry hasn't yet found it. Maybe Mr Turner can shed some new light.
Customers paying up to £250 more on energy bills than they should every year
10 tips for taking out a personal loan
Has your Premium Bond won the £1million jackpot?
There are 'dark corners' of the investment and pensions industry, says Pension Minister
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
- 1 Home Office says Nigerian asylum-seeker can’t be a lesbian as she’s got children
- 2 What happens to your body when you give up sugar?
- 3 Japanese island overrun with cats after population explodes
- 4 Apple and Google users being spied on for a decade because of 'Freak' security flaw
- 5 Have sex with your iPad thanks to the new sex toy no-one asked for
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
Ukip would cut billions from Scottish budget to fund English tax cuts
End of the licence fee: BBC to back radical overhaul of how it is funded
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
iJobs Money & Business
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...
£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads