The fact that young people today are under significant pressure to save for property, or would prefer to save for consumer items, means that many are failing to adequately save for retirement . Unlike many of the older generations, young people today will often not be able to rely on final salary pensions . The pensions time bomb is genuinely ticking.
The new measures suggested in the Queen’s speech are an attempt to stop the clock. The new national pensions savings scheme will automatically entitle workers to be enrolled in a ‘personal account’ in which they can save. Employees will put in 4 per cent of earnings, which the employer will top up by 3 per cent. The government will provide a further 1 per cent. Auto-enrolment, as the scheme is being touted, may be the solution to the pensions crisis.
However, will employees opt in? Recent research conduced by insurance companies has found that many employees will continue to opt out of pension schemes, preferring to make their own investments . Whether this pensions ‘solution’ will actually stop the pensions time bomb remains to be seen.
Ticking time bomb in the pensions sector
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Ticking time bomb in the pensions sector
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