Pensions crisis? Only if you’re middle aged
Workers in their 40s face the biggest challenge, data suggests, so here are tips to beat the squeeze, whatever your age
A generational divide is emerging in pension saving as people in the middle of their career fall behind young professionals and those nearing retirement.
This middle-aged group is unlikely to have the generous final salary pensions enjoyed by their parents – and they appear less aware of the need to provide for themselves than today’s younger generation.
Despite continued warnings about increasing life expectancies and the lack of resources to fund state pensions, survey after survey shows people are not saving enough for their old age. And there is a “black spot” of inadequate saving focused on those in their forties and fifties.
Continue reading (The Telegraph) →
Pensions: A system in crisis
Britain’s pensions system is in crisis with falling public confidence, lack of Government direction, and confusion over the benefits of workplace and state pensions.
The state pension has become less and less significant after increasing each year in line with prices rather than average salaries. As a result, the state pension is predicted to be worth less than 10 per cent of average salaries by 2050.
Continue reading (Mail Online) →
Final salary pension deficits jump by £35bn in a month
Despite millions of pounds spent by British companies to meet spiralling retirement costs, the total deficit of final salary-linked company pension schemes has increased by £35bn over one month, a report has said.
The Pension Protection Fund (PPF) calculated that the aggregate deficit of 6,316 so-called defined benefit (DB) schemes – representing about 12m members – jumped to £236.6bn in March from £201.5bn in February
Repeated rounds of central bank easing have contributed to a sharp drop in the yield on British government gilts – a staple investment for pension funds – making it more expensive for funds to match income to liabilities unless they add riskier, higher-yielding assets to portfolios.
Britain’s top 100 firms have injected £12.7bn into their pension schemes to make up funding gaps, while several companies have closed their final salary pension scheme to new members or are freezing pensionable salaries, according to data from JLT Pension Capital Strategies.
Continue reading (The Telegraph) →
Pension deficits still widening at top UK companies – report
The pension funding gap of Britain’s top companies has widened in the past year despite billions of pounds of corporate cash being injected into retirement schemes, a report said on Tuesday.
Pension consultants LCP said pension scheme deficits for companies in the UK’s FTSE 100 blue chip stock index grew to 43 billion pounds at June 30 compared with 42 billion a year before, as fund assets didn’t generate enough cash to cover obligations.
The finding is an illustration of the impact of repeated rounds of “quantitative easing”, under which the Bank of England has been buying back bonds to boost economic growth, contributing to a sharp drop in the yield on British government gilts – a staple investment for pension funds.
Pensions: Friends Life and Phoenix named worst of the dog funds
Bestinvest points finger at 113 pension funds that have underformed market by more that 10% for three years running
The Spot the Dog report named well-know pension funds, including Prudential and Scottish Widows, as underperforming. Photograph: Ralph A. Clevenger
Hundreds of thousands of pension savers have a total of £31bn languishing in underperforming funds, according to a report published by financial adviser Bestinvest.
It identifies 113 pension funds that have underperformed the market by more than 10% in each of the past three years. Among the worst providers that are failing to deliver returns is Friends Life, which has 23 “dog” funds. Phoenix, known for sweeping up millions of failing “legacy” life and pension policies sold by former life and pension providers that have closed to new business, has 15 in this category. Other well-known pension providers with several “dog” funds are Prudential and Scottish Widows.
Continue reading (The Guardian) →