Poor Hardest Hit By Compulsory Pension

Poor Hardest Hit By Compulsory Pension

People would be better off putting their money under the mattress than saving into personal accounts according to Ned Cazalet.  He said that people putting money into personal accounts would only start to see some benefit from their contributions if their pension pot generated a weekly income greater than the gap between their income and their state pension.  People who do not have a pension pot of £30,000 or more will lose out because they will only receive the minimum weekly income because of means-testing.  Their contributions to their personal account will have been wasted as they would receive the same level of income had they not contributed at all.

He added “The government knows it will be the savers with poor financial literacy that will be hardest hit.  The huge problem for consumers is that their weekly income is likely to vary from year to year.  It will therefore be impossible for those individuals to calculate whether or not it would be worthwhile saving in a personal account”.

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