Pension poverty pending as Brits rely on state
02 November 2009 / by Rebecca Sargent
Pensioner poverty is set to rise as 64 per cent of UK workers are looking to rely on state pension in retirement, research from AXA has revealed.
According to the study, the UK state pension is worth less than a third (31 per cent) of the nation’s average earnings. Commenting, Steve Folkard, head of savings and pensions policy at AXA said:
“There has to be a concerted, co-ordinated effort to make sure that people are adequately provided for, or we will inevitably be faced with a pensions dark age.”
According to the AXA research, in addition to the 64 per cent of people who are relying on the state pension to fund their retirement, 18 per cent of 25-34 year olds believe that equity in their homes will support them, despite the fact that the property ladder is becoming harder to get on to.
Meanwhile, almost a quarter of people believe they will still be paying off debts by the time they reach retirement.
When it comes to occupational pensions, there has been an alarming decline in membership, from 10.7 million active members in 1991, to 8.8 million in 2007.
The Government’s Personal Accounts initiative is expected to improve this situation with the launch of auto-enrolment. However, despite Pension Policy Institute estimating an additional 10 million savers by 2020, AXA’s research shows that this figure is more likely to be around 800,000.
Mr Folkard adds: “The erosion of the once sound company pensions infrastructure in the UK, which supported the retirement needs of the working population over much of the 20th century presents a future government with a massive challenge.
“Pensioner poverty is set to grow dramatically over the coming years and current reform measures will take years to implement.”
Personal Accounts are unlikely to impact many employers until 2016, and, as a result, AXA is calling on the Government to do more to avert a pensions crisis.
“AXA is calling for more Government messaging around the importance of pension saving. This should encourage individuals to take more personal responsibility in saving for an adequate level of retirement provision.
“We risk heading to the point of no return for many people in this country who may be left living on the very minimum in retirement,” Mr Folkard adds.
© Fair Investment Company Ltd
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