Experts concerned over pension savings
As reports continue to debate whether Theresa May will guarantee the 'triple lock' on pensions, experts are concerned that pensions are no longer appealing – and that we're not planning well for retirement.
Counting the cost
Last week, Paris-based think-tank, the Organisation for Economic Co-operation and Development, published its view that the UK would be better off abolishing state pensions for the wealthiest 5% to 10% of the population. This, they claim, would enable more spending on those who need it most.
The controversial suggestion comes as the UK faces rising costs due to an ageing population. The situation is further exacerbated by the 'triple lock', which guarantees annual increases in line with wages, inflation or by 2.5% – whichever is highest.
The policy has been criticised as unsustainable in an independent report recently presented to Parliament. Nonetheless, Prime Minister Theresa May has refused to rule out renewing, while Labour has promised to keep the rule if it wins the forthcoming election.
With the government state pension policy unclear, it’s possible people will be increasingly reliant on their own personal pension savings. However, guidance service Pension Wise has expressed concern that more and more people are putting their faith in property rather than in pensions. Last year, the Bank of England’s Chief Economist Andy Haldane also suggested property was a better investment, and pension providers are only just addressing the issue.
Meanwhile trust in providers is also at a low ebb. The revelation that 800,000 beneficiaries have been over-taxed on their pensions has done little to help their public image. As a result, it’s feared that people aren’t spending enough time planning their retirement.
To solve the problem, we must see retirement as part of the larger matter of managing our finances – and that how we manage our finances now affects our future. For example, even when pension schemes are unclear and interest rates low, it still makes sense to think ahead, making sure to settle any debt and reduce interest payments. This way you’ll have more money available when the situation is clearer.
For further information about Dukes Bailiffs, or to speak to us about making a payment, contact a Dukes operator today.