Pension News Waiting For Pension Reform ‘could Cost 50percent’
09 June 2006
With the personal accounts pension reform set to be introduced in around six years’ time, many people may wait to start saving for their retirement, although Aegon UK warns this could mean dramatic losses in pensions revenue.
The financial planning consultants firm claims that waiting those six years before beginning to pay into a pension plan could result in retirement income reductions between one third and a half, depending on age.
Aegon UK’s example case was of a 30 year old waiting until 2012 before starting their pension, meaning they would have their future pension income cut by as much as 39 per cent.
“It’s important [people] start thinking about their financial future and start saving sooner rather than later, using whatever means are right for them,” said Rachel Vahey, head of pensions development.
“There is a risk that people may believe that changes to the state pension alone will be sufficient for their retirement needs,” she continued.
“Another concern is that 2012 is the year it all starts, they may decide to put saving on hold until then – and this could mean they are worse off as a result.”
“Advisers should get their clients engaged in planning for the future and as an industry we should build momentum behind this,” Ms Vahey concluded.