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Retirement plans dented by downturn

Retirement plans dented by downturn

Category: Pensions

Updated: 21/04/2010
First Published: 21/04/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
A third of workers believe the recent downturn has adversely affected their retirement plans in some way, with many more unsure how the recession will impact their post-work years.

Some 13% of workers think they will have to prolong their working life by up to five years more than they had previously planned, research conducted by Towers Watson has found.

In addition, 3% said they would have to work for more than five years more than they had originally thought, while 5% believe they will have to work throughout the entirety of their retirement years.

One in ten respondents said they had no plans to shelve their retirement but that their expenditure in their post-work years would have to be scaled back because of the recession.

More than half (53%) of workers said the downturn had not made any bearing on the retirement plans, but 16% were unsure, admitting they did not yet know what impact the recession would have.

The results also showed that 68% of employees now believe that they are personally responsible for providing for their own retirement needs. Some 18% of workers said the responsibility lies with employers, while 15% said it rests with the government.

However, looking ahead over the next five years, the proportion of workers saying the prime responsibility of providing a pension income lies with themselves increased to 75%.

"Most employees today are aware that responsibility for managing their career and finances lies with themselves and they also recognise that, especially for pension planning, the shift towards personal responsibility is ongoing." said Paul Macro, a senior consultant at Towers Watson.

"However, many employees do not feel comfortable managing the provision of their retirement income needs. While 37% say they are comfortable with the responsibility, 28% say they are not and 34% are uncertain. Many employees lack the understanding, education or tools to make the right decisions."

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