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

Finacial products from our partners
Property search
  • Get to the point
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

    Recruitment Genius: Financial Adviser

    £20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

    SThree: Graduate Recruitment Resourcer

    £20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

    Guru Careers: Application Support Analyst / 1st Line Support

    £25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

    Guru Careers: .NET Developer / Web Developer

    £45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

    Day In a Page

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    How a costume drama became a Sunday night staple
    Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

    Miliband promises no stamp duty for first-time buyers

    Labour leader pushes Tories on housing
    Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

    Aviation history is littered with grand failures

    But what went wrong with the SuperJumbo?
    Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

    Fortress Europe?

    Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
    Never mind what you're wearing, it's what you're reclining on

    Never mind what you're wearing

    It's what you're reclining on that matters
    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence