In response to ONS figures that show that "total contributions to personal pensions fell from £20.9 billion in 2007/08 to £18.7 billion in 2009/10, largely due to a fall in the number of people contributing during the recession."
Michelle Mitchell, Charity Director at Age UK says
‘Although some fall in contributions is not surprising in hard times, the extent of the drop is extremely worrying. Too many people are devastated when they retire as the gap between expectations and the reality of what they will actually receive for a pension is realised.
The roll-out of automatic enrolment into a workplace pension, starting next year .will help as most employees will have the right to a pension contribution from their employer but it is critical that the Government act now to ensure that adequate information and advice is available. Reform is also vital to help people coming up to retirement who may need to buy a retirement income in the form of an annuity.
Too many people are missing out on extra income by failing to shop around for an annuity on the open market. Almost a third of people do not shop around at all, and
many professional advisors are just not interested in looking after the smaller pension pot - a third of funds are £10,000 or less. There is clear market failure: a man of 65 with the average-sized pension fund of £30,000 could increase their income by around £250 a year by going for the best annuity rate, rather than the worst, or by £700 a year if they qualify for an enhanced rate because of a health condition or other impairment. Age UK Enterprises has an Annuity Service in partnership with Premier Retirement Services designed for variety of pension pot sizes. This service provides information and guidance through an online comparison site or through a telephone service, to support our customers.
By shopping around when they buy an annuity people can help maximise income in retirement. The Government must make it easier for people to shop around and address the problems of people with small funds.
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