Pensions saving to become popular again - Pensions - News - Moneyfacts


Pensions saving to become popular again

Pensions saving to become popular again

Category: Pensions

Updated: 25/02/2009
First Published: 25/02/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The sharp fall in property values and reported rise in home repossessions is likely to change the once growing perception of 'my house is my pension fund' and drive people back into the pension savings market once the economy starts to rebuild, says a report from actuarial firm, Watson Wyatt.

The report, reality bites, looked at defined contribution (sometimes called money purchase) pension schemes where the employer and possibly the employee make monthly contributions for a pension on retirement and found that these arrangements had "suffered unprecedented stress" due to the present economic conditions. This has been a huge wake-up-call for contributors who have seen their fund values fall and will ultimately force pension providers to "sharpen up their game". The report predicts, in the longer term this will lead to "stronger, better quality products".

Under such schemes the employer may guarantee the amount of contribution - hence the term defined contribution. However, employees might be encouraged to top up the pension with their own contributions. The fund is usually invested in equities and property which, as we all know, can go down as well as up. Therefore, the level of the eventual fund is not guaranteed and the final results will depend upon the investment performance. In short, the onus is on you, to regularly check that your fund will be adequate.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Savers more worried about looks than pension

When you think of getting older, what’s the first thing that comes to mind? For many, it’ll be fears about their looks – but they should really be concerned about their financial situation.

Pension funds defy uncertainty with strong returns

Economic uncertainty has been a persistent theme in recent months, but happily, not every area has been negatively impacted. Indeed, our latest figures show that the pension sector has bucked the trend and posted unexpectedly strong returns.

Do you know what a pension is?

Pensions are something we all need to get our heads round, and we’re continually told that it’s important to start saving into one from as early as possible. Yet new research suggests that this advice could be falling on deaf ears.