There are plenty of sharks swimming in pension fund waters, ready to savage unwary savers
to ensure they will have a decent private pension on top of whatever the government of the day will provide when they retire.
The present system of auto-enrolment in workplace pension is fine, but the 8 per cent minimum isn’t enough. Young people have to save more if they want a decent lifestyle in retirement.It’s a harsh message, particularly since there are such huge imponderables, and it comes at a difficult time. The idea that the state will not be able to provide decent pensions in 30 or 40 years’ time is not something that any politician can acknowledge.
Against these negatives I would cite three points. One is that over any long period, investment in equities provides a positive real return – they beat inflation. The second is that tax relief on pension contributions, plus employers matching what you put in, means that putting money into a pension is a great way to build up a savings pot.
does the job of making people save whether they like it or not. I predict that the 8 per cent minimum will be bumped up to 10 per cent and then probably up to 12 per cent within the next decade.The other is to make pensions more interesting. If that seems a tough gig, I have noticed among some 40-year-olds that they take a certain pleasure in seeing their pension pots mount in size.to get the employer’s top limit on matching is a no-brainer.
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