Are all we headed for a poverty-stricken retirement?

A raft of new statistics released this week has dealt a series of devastating blows to Britain retirees – and it looks like those still at working age could see their own pensions reduced to a pittance.

Government ‘reforms’ hurt private pensions

Research has now shown that Government attempts to reform private pensions provisions have has a negative effect, leaving those with a private pension worse off. While state pension offers a guaranteed amount at retirement, based on the number of years you are in work, private pensions are paid into from a worker’s salary and topped up by their employer.

In a report from PricewaterhouseCoopers LLP, over three-quarters (77%) of employers stated that the Budget’s pensions tax proposals have further reduced their motivation to provide workplace pensions. Worst still, 96% of all employers also now think that so called ‘defined benefit’ pensions are unsustainable, with three-quarters (74%) considering ceasing all future accrual for existing employees.

Zombie pensions

Marc Hommel, partner and UK pensions leader, PricewaterhouseCoopers LLP, said:

“Our research shows fewer than one in twenty employers expect their defined benefit pension scheme to be open to new members in five years’ time. Further, only about one in five are saying they will not freeze future benefit accrual for existing members, potentially leaving UK businesses with a legacy of ‘zombie’ pension funds.”

Yes public-sector pensions, funded by the tax-payer, are reported to be unharmed by recent developments, sparking further anger that the British public are funding the comfy retirement of state employees while themselves looking forward to poverty-stricken retirement.

Britain lagging behind

With private pensions looking far from healthy, the Office of National Statistics has revealed that the state pension provisions offered in Britain are the poorest of any of the countries with the OECD. The basic state pension is just £95.25 per week for an individual and £152.30 for a couple.

Further, it was revealed that the outlook for women is particularly grim. In September 2008, 34% of female pensioners (2.3 million women) received 60% of full BSP or less, compared with 2% of male pensioners (under 0.1 million).

Michelle Mitchell, Charity Director for Age Concern and Help the Aged said:

“It’s a national disgrace that more than two million UK pensioners are trapped in poverty”

“With British pensioners receiving one of the lowest state pensions in Europe, the Government must go further to improve the situation for the country’s poorest older people. “