Money News: Golden years are over as retirement savings are slashed by 50%

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The Independent Online

Payouts from personal pensions have plummeted by more than half over the past 10 years, due to the poor performance of the stock market in that period.

According to Moneyfacts, the financial analyst, a worker who retired after saving £500 a year for 15 years into a with-profits personal pension would have received an average payout of £25,840 back in July 1996.

An employee retiring in July this year, after having saved the same amount in the same type of pension, would get 52.3 per cent less - only £12,306.

Comparisons for other pension vehicles make similarly depressing reading. Unlike with-profits funds, a unit-linked personal pension does not "smooth" out profits to protect investors against stock market falls. Anybody with this type of pension who had saved the same sum as above over the same timespan and retired in July 1996, would have been left with a pot totalling £19,709.

Change the leaving date to July 2006, and the pot is worth £11,696 - 40.6 per cent less.

Those retiring in 1996 benefited from the 1980s and 1990s bull markets on the London Stock Exchange. But those stopping work this year will have seen their personal pensions hit by the dot-com and telecoms crash and the subsequent stock market slump. Between New Year's Eve 1999 and the start of the second Gulf War in March 2003, the FTSE 100 fell from 6,930 points to 3,257.

"The situation facing many pension savers would be even more desperate had it not been for the stock market revival over the past three years," said Richard Eagling of Moneyfacts.

"These figures should serve as a powerful reminder that securing a comfortable retirement will only be possible for those who actively monitor and manage their own pension provision."

The problem has been compounded, he said, by lower rates for annuities - the annual income for life that all holders of personal pensions must buy with their lump-sum savings.

In July 1996, a 65-year-old man with a £100,000 pension fund would have been able to buy a standard annual annuity of £11,390, payable until his death. But by this summer, the same lump sum purchased an annuity of just £6,850 a year.

Long-term care: Baby boomers in blissful ignorance

Two-thirds of "baby boomers" have made no plans for their future long-term care needs, a report from the Help the Aged charity has warned.

Average fees for nursing care for an elderly person come to around £20,500 a year. But Help the Aged found there was a great deal of confusion over who pays these costs.

In fact, the majority of adults now aged between 45 and 65 - those born during the Second World War and in the two decades after - are at risk of having to sell their homes to fund their own care in later life.

The complexity of the current funding system for healthcare, coupled with a general lack of knowledge among the public, is to blame, the report said.

"Needing care in older age is a fact of life for one in five of us," said Jonathan Ellis, senior policy manager at the charity. "People are deluding themselves if they think it will never happen to them."

By 2017, there will be more people in the UK aged over 40 than under 40, he added.

"[In turn] the proportion of older people with care needs is likely to grow."

The charity wants the Government to simplify its calculations for funding long-term care, end means-testing and introduce a single national assessment process.

As it stands, anybody living in England and Wales with savings in excess of £21,000 - including the value of their home - must meet the full cost of care. The rules are different in Scotland.

Many critics argue that the system is unfair to those low- to middle-income earners who have saved for retirement and shouldered a mortgage for 25 years. They may then have to sell their home to pay for care - which is free to those who haven't built up any assets.

More than 900 people took part in the charity's survey. A fifth said that life was "too short to worry about something that may not happen".

An official report released in June revealed that one in five elderly people had been wrongly denied free care. Meanwhile, a government consultation continues into how the care funding system should be overhauled.

Self-assessment: Deadline looms for paper tax returns

Millions of self-employed workers who want the taxman to calculate their bill for the 2005-06 tax year must send their forms in by Saturday 30 September.

Everyone returning a completed form by post to meet this deadline will have their correct tax worked out by Revenue & Customs. After that, they will have to calculate the amount of tax owed themselves.

If you're prepared to file your forms online, there's no need to rush. Since the Revenue's software will calculate your tax for you instantly, you have only to meet a different deadline - 30 December.

The overall deadline for all forms to be sent back to the taxman is 31 January.

Mortgages: Half of salaries go on the home loan

Mortgage repayments on the average UK home are eating up more than half of take-home pay, a new survey has suggested.

After tax and national insurance have been deducted, 51 per cent of a household salary is spent on the home loan, according to Home Truths 2006, a report compiled by the Hay Group, a consultancy that looks at personnel issues affecting business.

The report's comparison of average salaries and property prices took in 430 towns across England and Wales. Researchers found that only in 9 per cent of households did the mortgage repayments represent one-third of total income - the traditional yardstick for affordability.

A buoyant housing market was to blame for the financial pressure on homeowners, Hay said, as property prices continued to rise faster than income.

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