Pensions crisis?

Why retirement is now big news

The British population is aging. Thanks to better healthcare and improved living standards the national life expectancy is rising. In 1950 a 65 year old man might have expected to live for a further 12 years. By 2030 that figure will be closer to 21 years - more than 20 years beyond the current age of retirement. That's a long time to depend on your pension.

This means is that more pensioners are being supported by fewer and fewer workers. By 2050 the dependent population will have risen from 27% to a staggering 48%. There has been no increase in pension uptake and long-term saving in anticipation of this longer life beyond retirement. It is estimated that around 60% of 35-64 year olds are under saving.

If this situation goes unchecked, pensioners will end up poorer. The state pension alone will do little to help people achieve the quality of life they hope for in retirement.

The law insists that all employers with five or more staff offer their employees access to a stakeholder pension (for information on the law and exemption see the Department for Work and Pensions). But the promotion of these schemes often amounts to little more than a dog-eared notice in the staffroom and, while employers are not obliged to make any contribution, few employees are prepared to give up a proportion of their wages now to secure a comfortable retirement.

A nationwide change in attitude towards to pensions and saving for the future is vital. Research has shown that real change is dependent on employer contribution in pension investment, so any change in employee attitude must be employer-led. With this in mind, the Department for Work and Pensions established the Employer Task Force on Pensions. The Task Force is a non-partisan, employer-led body with union representation whose chief goal is to develop employer-led solutions that would enable and encourage employees to save more and for longer.

Their report states emphatically that this is the "last-chance saloon" for voluntary pension schemes. Unless employers are prepared to take on board that "pension provision is part of being a good and responsible employer ... they will face higher taxes and compulsion in the future."