The number of people facing retirement hardship has risen by 3.45 million in the past 12 months, a City analysis says.
More than 16 million people – or 54 per cent of the working population – will receive an inadequate pension, it says. The number facing hardship, defined as those who will receive less than 40 per cent of their final salary, has increased by a million a year since 1996.
Plunging values of company pension schemes in particular will place an increasing burden on the state, according to the study, which was conducted by JP Morgan Fleming Asset Management.
While JP Morgan has a vested interest in persuading workers to save more, there is little doubt that millions of employees in a wide range of jobs from the most menial to professional occupations are facing a miserable retirement.
The figures will make disturbing reading for ministers, who are awaiting a Green Paper on the issue, and union leaders, who argue that pension provision is now the single most important issue for people at work and predict a wave of industrial action unless the crisis is addressed.
Simon Crinage of JP Morgan Fleming said the problems future pensioners faced had been caused by falling equity markets, declining annuity rates, changes in the tax treatment of pension funds and more erratic working patterns.
John Monks, the general secretary of the Trades Union Congress, told the TUC's annual conference in Blackpool this week that companies should take much of the blame for deserting final salary schemes and switching to money purchase arrangements where there was no guarantee of pension levels.
The JP Morgan Fleming Pension Map of Britain 2002 says people who receive between 25 per cent and 40 per cent of their final salaries will face a "difficult retirement" and are likely to be reliant on state benefits to supplement their income.
Employees paid between 40 and 50 per cent of their final wage will be "OK" after retirement, but the number in this category had slumped from 5.65 million in 2001 to 4.90 million this year.
Only those with 50 per cent plus will be "comfortable", and their numbers have dropped from 10.75 million in 1996 to 8.70 million today – just 29 per cent of the working population.
Mr Crinage said there was grave concern that for the first time since his company started to conduct the research in 1996, the number of working people facing hardship in retirement was in the majority.
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