Turbulent times take their toll on pension savings

20 June 2008 / by Joy Tibbs
Increased living costs are limiting the amount people are able to save for retirement, according to Edward Jones.

Its research shows that 43 per cent of respondents in employment have saved ‘far less' or a ‘little less' for their retirement because of rapidly rising fuel and food prices. A staggering 23 per cent had not even started saving towards a pension.

While the survey showed up similar results across the different age and social groups included, there were some notable variations in terms of region. Those in the north are most likely to have made cuts to their retirement income funds at 48 per cent, while just 39 per cent of those in London have done so.

Andrew James, retirement planning manager at Edward Jones, said: "It's a big concern that the research shows people of all ages and social classes are cutting back saving for retirement in order to pay for essentials. If this trend continues then we are just storing up even more problems for the future.

"Those in their late 40s and 50s really do not have the time to make up for any missed contributions so we believe it's vital for their long term financial futures that they keep saving.

"We all know the UK has a looming pension's crisis and this news just adds to the problem. It's also disheartening to see that 23 per cent of respondents have not saved a penny yet towards their retirement."

Legal and General has also recognised that pension savings may be under threat and has highlighted some of the challenges facing the future of pension schemes. Legal and General Investment Management's head of defined contribution strategy, Ian Richards believes the numerous Government changes to schemes have caused confusion and may not have helped.

Mr Richards points out that more than 400 sets of pensions regulations were published between 2001 and 2007. He said: "We need to be careful to ensure that the changes being introduced by Government, regulators and professional bodies are not doing more harm than good.

"Unless we find ways of getting employees to be more appreciative of the schemes and help employers to get better value out of them, the schemes are at risk."

©Fair Investment Company Ltd