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Savers warned of pensions dark age

Savers warned of pensions dark age

Category: Pensions

Updated: 02/11/2009
First Published: 02/11/2009

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 It is now over 6 months old so the content may be out of date.

UK savers have been warned that pensioner poverty is likely to increase, as figures show that the number of people opting to take up occupational schemes is falling.

Research conducted by AXA has found that 64 per cent of workers plan to rely on the state pension when they retire, despite the fact that it is worth less than a third (30.8 per cent) of the nation's national earnings.

The UK's top level of state pension provisions lags behind the rest of the countries in the G7, which also includes Canada, France, Germany, Italy, Japan and the USA.

At 34.4 per cent, Japan's level of state pension compared to average earnings is the next worst, while Italy tops the bill of the G7, with a state pension worth 67.9 per cent of the average wage.

"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," commented Steve Folkard, head of savings and pensions policy at AXA.

The research also found that almost one in five (18 per cent) of 25-34 year olds are planning to use the equity built up in their homes to support them in their later years, although they have been warned that this may not be possible in light of stricter lending criteria.

Figures show that the number of people enrolled on occupational pension schemes fell from 10.7 million to 8.8 million in 2007. While the number is expected to rise when personal accounts are introduced in 2012, AXA has predicted that less than one in five workers will take part in the automatically enrolled scheme.

"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 centur,y presents a future government with a massive challenge," said Mr. Folkard.

"Pensioner poverty is set to grow dramatically over the coming years and current reform measures will take years to implement."

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