Home in on a way to save our pensions

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.

s.dunn@independent.co.uk

Independent Partners: 10 top tips for retirement. Get your free guide here

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Lewis Hamilton walks back to the pit lane with his Mercedes burning in the background
Formula 1
Arts and Entertainment
The new characters were announced yesterday at San Diego Comic Con
comic-con 2014
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
PROMOTED VIDEO
Arts and Entertainment
No Devotion's Geoff Rickly and Stuart Richardson
musicReview: No Devotion, O2 Academy Islington, London
News
i100
News
Bryan had a bracelet given to him by his late father stolen during the raid
people
News
A rub on the tummy sprang Casey back to life
video
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
i100
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
people
News
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
News
Tovey says of homeless charity the Pillion Trust : 'If it weren't for them and the park attendant I wouldn't be here today.'
people
Sport
Rhys Williams
commonwealth games
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

    Olivier Rousteing is revitalising the house of Balmain

    Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
    Cancer, cardiac arrest, HIV and homelessness - and he's only 39

    Incredible survival story of David Tovey

    Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little