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.


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

Life and Style
love + sex
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Graduate Application Support Analyst

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Reach Volunteering: External Finance Trustee Needed!

    Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

    Christine McCleave: FP&A Analyst

    £36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

    Recruitment Genius: Sales Executive - OTE £40,000

    £15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

    Day In a Page

    Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

    Climate change key in Syrian conflict

    And it will trigger more war in future
    How I outwitted the Gestapo

    How I outwitted the Gestapo

    My life as a Jew in wartime Berlin
    The nation's favourite animal revealed

    The nation's favourite animal revealed

    Women like cuddly creatures whilst men like creepy-crawlies
    Is this the way to get young people to vote?

    Getting young people to vote

    From #VOTESELFISH to Bite the Ballot
    Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

    Poldark star Heida Reed

    'I don't think a single bodice gets ripped'
    The difference between America and Israel? There isn’t one

    The difference between America and Israel? There isn’t one

    Netanyahu knows he can get away with anything in America, says Robert Fisk
    Families clubbing together to build their own affordable accommodation

    Do It Yourself approach to securing a new house

    Community land trusts marking a new trend for taking the initiative away from developers
    Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

    David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

    The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

    Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
    With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

    Money, corruption and drugs

    The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
    America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

    150 years after it was outlawed...

    ... America's first slavery museum is established in Louisiana
    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

    The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
    Tony Oursler on exploring our uneasy relationship with technology with his new show

    You won't believe your eyes

    Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
    Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

    Moores must go. He should never have been brought back to fail again

    The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn