Where am I? 
Home Pensions - Retail Retirement Income
Categories: Retirement Income
Topics: blog| Retirement| savings and investments| Steve Webb
Phil Clarke, technical services manager at Rowanmoor Pensions, says IFAs and the government must act now to beat pensioner poverty.
There have recently been a number of discussions on BBC Radio 5 Live's morning show about the difficulties people are experiencing in providing for their retirement.
The presenter said in one discussion it is a concern that people were not saving for an income when they come to retire.
He then interviewed a member of the public who explained he was self-employed and was unable to make any provision for his retirement.
After the payment of his mortgage and general living expenses he had nothing left to pay into a scheme. He could also not see a time when the situation might change.
Further discussion took place on the merits of holding a property as an alternative to a pension to provide an income in retirement.
However the view was the falling value of properties and the difficulty in obtaining tenants, not least finding the money to purchase such properties, did not make this a particularly attractive alternative.
My 25-year-old son recently said to me: "What is the point of a pension? I need the money now and I will think about it later."
I remember an ad in the 1960s showing a picture of a man in his twenties and a succession of pictures at ten-yearly intervals.
At the bottom of each picture was the comment "I must start saving for a pension soon".
The final picture illustrated his despair that having now retired he had no income apart from the state pension with which to enjoy his retirement.
I said in an earlier article that the pensions minister, Steve Webb, has said state pension is not enough to live on, yet it appears an increasing number of the population will rely on this.
Webb believes "less than half of all people are building up any form of retirement apart from the state pension" so the position could be considerably worse.
Advisers and the government need to be more proactive in educating people about what they can expect if they do not save.
Priorities need to be set and pension contributions started as early as possible if we want a happy retirement.
| Share | |
| Comment | Blog: IFAs must give clients the hard facts about pensions |
More retirement income news
Email alerts
Recommended reading
Categories
Topics
Comments
Media misinformation
The biggest problem is the misinformation in the media. Whenever there is a stock market downturn, all you hear is "millions wiped off pension funds". The average Joe Blogg hears negative soundbites on pension all the time. Pensions are fantastic. If you have ever done an annuity, find out how much the client has paid in net of tax relief. Simply ask the insurance company for the figure. Now, I'll bet you that the tax free cash the client will get will be, either more or slightly less, then the amount of her/his net contribution over the life of the plan. i.e. at the point of vesting the pension the client virtually gets ALL their premiums back. Consequently the annuity they receive is free money! You never see this being reported in the media. How many people will invest in pensions if they knew the above?
Posted by: Mike Palmer
Related articles
Most Read
Audio / Visual
With the industry's biggest fund managers, IFAonline welcomes you to the media centre.
This year we have 14 awards designed to mark out the very best products in a highly competitive and innovative market. This includes three new awards for 2011 to reflect the developments in this rapidly growing market: Best Dual/Multi-Index Product, Best Structured (Oeic) Fund and Best Structured Product Provider.
Events
Poll
|
|
Job search
Ifaonlinejobs will open the right investment career path for you. Search hundreds of vacancies on www.ifaonlinejobs.co.uk now
In Focus
Two months left before the ‘real RDR deadline’ – are you compliant with the required professional...
Viewpoints
2012 marks a watershed for the Life companies, fund managers, banks and advisers who service...
sponsored by
Pensions
the real problem is that we have made pension plans cheap as chips what we have not addressed the return at the end of the day. If you were approached in the street and asked, if you invest in this plan for the next 40 years and the rate of return on conversion from capital to income was 3.5% would you buy one suggest that you would not. Lets say that you aimed at a £100,000.00 fund which today is well above the norm and above the 401K's in the US in 1991 bought you £16,500.00 of income today just £3,500.00. The problem is that we are all living too long and the 10 year gilt rates are were they are, and likely to stay for a while. Pensions are too restrictive what we need is a view on "retirement benefits". The other issue is for the young family were there is a mortgage living expenses and children to raise, if the choice was shoes for the children or a pension plan what would you choose. If you conrtribute too little to the pension plan then you are below living standard but above pension and savings credits, paid by the UK goverenment ( hope this information is in the compulsory NEST plan) as you may be doing a diservice to the member of the public!!!
Posted by: roger holloway