Pensions Commission Reborn as Retirement Crisis Looms

Research commissioned by the government has found that retirees of the future are on course to be poorer than the retirees of ‘yesterday’.

The research found that:

• Retirees in 2050 will be £800 worse off in pensions income than today.
• 40% or working age adults (some 15 million people) are not saving enough for retirement.
• 3 million self employed people are saving nothing towards their retirement.
• Men are still likely to achieve double retirement income to women, with the average male have £5,000 pa more pension income at £200 per week compared to women at £100 per week.
• 75% of those of people from a Pakistani/Bangladeshi origin are saving nothing towards retirement and this may be down to Sharia Law that prohibits people making a profit/gain on investments or paying interest on debt.

The Pensions Commission was launched in 2006 and resulted in the setting up of Auto enrolment in workplace pensions in 2012, which has now boosted the number of working people who are actually savings towards retirement to 88% but we are still not saving enough.

Comment

The Pensions Commission is now back up and running again to tackle the above issues.

An interesting problem given the government has changed the law in that unused pensions will be included in your estate on death and therefore, potentially subject to inheritance tax. 

• Why would you save to get 20% income tax relief only for it to be taxed 40% on death?
• Education is key, financial services should be on the national curriculum.
• Simplified advice should be allowed to make it cheaper and easier to access professional help.
• Government should issue grants to ‘digital advice’ developers to make development faster and more accessible for all.
• Work needs to be done to allow for religion and solutions found for Sharia Compliant retirement solutions in the same way it has been done for Sharia Compliant mortgages.