[UK] How We Ended Up Facing Old Age Poverty

from The Daily record

PENSIONS CRISIS..

Q. What exactly is the problem?

A. Figures suggest more than 12million people over 25 are not saving enough for their retirement. Unless action is taken, that would mean spending on pensioners would have to rise by £57billion a year.

Q. How have we ended up in this position?

A. We are living longer. An ageing population means that there are not enough taxpayers of working age to fund pensions.

Q. Have problems with private and occupational pensions made things worse?

A. Successive governments tried to encourage people to save for their retirement and not rely on state handouts. But in the early 1990s, mis-selling of pensions led many people to opt out of occupational pensions and set up private pension schemes, which turned out to be worth less than expected. The result was a massive under-investment in the pension industry.

Q. What does it mean for the average worker?

A. It means the amount of money needed to be put aside if they want to enjoy a comfortable retirement is rising all the time. Experts predict a 30-year-old man wanting to give up work at 65 on an annual income of £20,000 in today's terms would need to save more than £260 a month.

Women who take career breaks to have children will face even higher contributions if they are to have a comfortable retirement.