Forum Brief: Pensions expectations

Millions of people are set to face retirement incomes well below what they expect, new government research has revealed.

In a study into private pension provision, the Department for Work and Pensions predicted tough times ahead for some.

The survey said it is questionable whether it will be possible for many people to achieve an income in retirement to meet their expectations.

Forum Response: Age Concern

Gordon Lishman, director general of Age Concern, said: "Pensioners who enjoy a comfortable retirement generally have a good private or occupational pension. But many people, particularly women and those on low incomes, don't have a private pension and rely on the basic state pension.

"When people retire, the change in lifestyle can come as a nasty shock as the basic state pension fails to cover basic living costs. By the end of this year half of all pensioners will be eligible for means-tested benefits.

"The government must increase the level of the basic state pension to provide a solid foundation for retirement income. As part of an integrated pensions strategy it must also close the advice gap to ensure that everyone has access to good information and advice to make informed decisions about their financial futures."

Forum Response: Association of British Insurers

Joanne Segars, head of pensions at the ABI, said: "The results graphically illustrate the need for the government to raise awareness and understanding of the need for people to save, the risks of not doing so and what level of state support people can expect in retirement.

"The government needs to do three things: reform the state pension system so that people know that it pays to save; consider further incentives to make saving more affordable and promote greater awareness through the workplace."

Forum Response: Institute of Directors

Derek Brownlee, pensions executive at the IoD, said: "The survey demonstrates a number of points which we have been making in our publications on pensions recently.

"Many people have unrealistic expectations about when they will be able to retire, and how large their pension will be, so impartial pensions advice and education is needed.

"It's very important that the government looks at what is stopping people saving adequately for retirement and realise that people will not be able to save more for their pensions when they are being hammered by ever increasing taxes."

Forum Response: Help the Aged

Richard Wilson, incomes policy officer at Help the Aged, said: "It is now universally accepted there is a crisis in confidence in the pension system with people not saving nearly enough for their retirement.

"However, it is not enough just to tell people to save more - the government needs to restore confidence by ensuring pension schemes are more secure and remove confusion by simplifying the system and providing better information and advice."