Recession fuels pensions crisis fears

Bread on the table now, or later? It's a choice many of us are making and one in six have opted to stop paying into their pensions account because of the economic downturn.

The Office of National Statistics found that the squeeze to household finances is leading many of us to prioritise the now over saving for tomorrow. The ONS is concerned that a generation of pensioners is going to suffer from having reduced their savings just when the need to prepare for retirement is greatest.

Research into the UK's growing pensions crisis made by the Workplace Retirement Income Commision, headed by Lord McFall, talked of a 'vicious spiral' facing pensioners and the pensions industry. He said: 'At a time when people need to save more for a decent retirement they are reducing their commitments. This is a vicious spiral which needs to be addressed by the Government and the regulators. They must ensure that we have promote a culture of saving in the UK.'

ONS figures released yesterday show a decline in the number of people contributing to personal pensions from 7.6 million in 2008 to 6.4 million in 2009 – a difference of 1.2 million. Major changes to the pension system that come into force next year it said could leave some without sufficient incomes. It said the move to the new scheme 'raises the question of whether defined contribution pensions will be capable of providing sufficient pension income for future generations of pensioners.'

As if getting old wasn't scary enough!

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