Osterich generation faces pension woe

They’re calling them the Osterich Generation. Those who know that they’re likely to live longer than previous generations and that state and private pensions provisions will be less. But are doing nothing to counteract it.

It comes after a new report on the future of retirement was released by HSBC. The banking giant interviewed 1000 people and found that 49 percent believe that they will be worse off in retirement than their parents. Joanne Segars, chief executive of the National Association of Pension Funds, said: ‘Far too many people are trapped in the headlights when it comes to their own retirement. They know they'll need money in their older age, but they're doing nothing to prepare for it.’

Tom McPhail at Hargreaves Lansdown, said the report highlights that the UK is woefully underprepared for retirement and that poverty and hardship await those making wrong decisions today.

‘The most significant step to resolve this problem will be the government’s auto-enrolment plan, which will mean that by 2016 the vast majority of employees will be members of a pension,’ said Mr McPhail.

‘This is only half the battle though, the next great challenge will be to persuade adults right across the spectrum of ages and incomes that simply joining a pension isn’t enough; the amount you pay in is also vitally important. Average contribution rates to money purchase pensions are stuck at around 10 percent of earnings; the default auto-enrolment contribution rate is just 8 percent of earnings. Without increased commitment and engagement millions of people will find themselves living out a brief and disappointing retirement.’

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