Surge in Britons without a pension

Published on Monday 11 April 2005 14:06

PENSION provision in the UK has fallen over the last eight years, according to figures contained in an official report from the Department for Work and Pensions.

According to the data, 45 per cent of employed adults and 60 per cent of self-employed adults currently have made no provision for their retirement.

The news will further increase the worries that a national pensions and savings crisis is looming.

The provision of pensions is already a concern for about 65,000 employees who have seen their pension schemes collapse, leaving them with little or no prospects of receiving an income in their retirement.

These people will be entirely reliant on the minimal state pension and on a benefits system that will be heavily strained in future years, when they reach retirement.

The number of workers who have made no provision for their pension has risen rapidly under the present Government, from 40 per cent as recently as 1998/99. This shows that an additional 2.1 million people have not yet started to consider their positions when they retire.

The findings of the Family Resources Survey were highlighted by Shadow Work and Pensions Secretary, David Willetts. The revelation is likely to provide ammunition for pre-election clashes on the issue.

The Tories have pledged to take action to boost savings, but Labour’s election manifesto is not expected to put forward any ideas on pensions.

Instead, the Government will wait to see the recommendations put forward by the Pensions Commission, under Adair Turner, which are not due to be released until after the election.

The CBI believes the decline in pension saving has been worsened by changes to rules on valuing pension funds and several financial scandals, including mis-selling and the collapse of Equitable Life. But, the employers’ organisation feels Gordon Brown must take some of the blame, following his decision to abolish dividend tax credits worth an estimated 5 billion a year.

It is thought around 13 million people face having to save more or work longer to achieve a comfortable retirement.

Members of occupational pension schemes based on defined benefits now have a safety net, following the introduction last week of the Pension Protection Fund.

This scheme has been set up to help out companies that fail, making sure that the pension provision for their employees is covered.