Pension Crisis

Put simply, the pension crisis will affect you and everyone you know.

The pension crisis has already begun, 56% of the population has no pension provision at all. This is probably due to a lack of confidence in the current complex system and confusion as to how to best to plan for retirement. Here we look at the key reasons why the traditional pension is outdated, under performing and ready for the scrap heap. Welcome to the great Pension Crisis of the 21st century.

Why long life is killing traditional pensions

In the 1950’s and 60’s it was accepted that we would only be expected to live a few years after retirement. This life expectancy table clearly highlights our increasing longevity.

Year Average life expectancy of a male in the UK Average life expectancy of a female in the UK
1981 76 81
2003 80 83
2026 (UK projection) 84 87

One of the causes of the retirement pension crisis is increasing life expectancy. Scientific advancement means we are living longer but for pension planning, this is disastrous.

Traditionally when we retire, our pension will be used to purchase an annuity which will provide an income for the rest of our lives, but as we enjoy increasing longevity, annuity returns decrease as they have to last longer. At the moment the pension crisis is so bad that an index linked annuity of £100,000 will pay around £5000 per year, which might just cover your heating bills!

Why the only winners in this pension crisis are the pension companies

Would you trust your money with a company that swallows up to 80% of your investment in fees? Sounds crazy doesn’t it but that’s the reality for some people investing in traditional pension funds!

If you had invested a significant proportion of your hard earned wage year after year of your working life, to find that of the £100,000 you put into your pension fund, only £20,000 remained after fees – would you be happy? The Pension companies are only making the pension crisis worse.

Only pension companies seem to get away with this. With all the confusion, complicated schemes and lack of transparency it’s not surprising that people go along with it, as it seems there is no other option for retirement planning available.

Pension Crisis Graph

Would you risk your entire financial future?

So how do the pension companies invest your hard earned cash? Well many pension companies stick your money into shares and over the last decade you might have been better avoiding the pension crisis altogether and putting your money under your mattress.

In January 2000 the FTSE 100 share index stood at 6268 points. Ten years later in January 2010 the FTSE stood at 5188. That’s a huge loss, not even taking into consideration inflation. Now the market may do better over the next ten years but are you prepared to take that risk?

No one would vote for these policies

Successive governments have compounded the pension crisis. Politicians can take the credit for the collapse of the final salary pension and constant policy changes which have only exasperated the problem. Anyone waiting for the government to save us all from the pension crisis will be sorely disappointed.

How can you escape the pension crisis?

It’s clear to see that relying on an outdated, poor performing pension is not the answer to a financially stable retirement.

What are the options? Never retire? Retire in poverty? Accept the pension crisis? It doesn’t have to be this way – you do have options.

At Rescue my Pension we may be able to assist you to plan the retirement you deserve and avoid the pension crisis. We will advise, guide and support you by planning a personal strategy for you using below market value property as a means of funding your pension. This will enable you to retire without worrying about your income.

Don’t bury your head in the sand and accept the pension crisis. Instead, contact us now to discuss your property investment plan.

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