Pensions crisis escalates

Updated 11.58 Fri Sep 05 2008

Keywords: Hargreaves Lansdown, salary, government, fund, pension

The number of people saving into a personal pension has fallen by nearly one million during the past year, research has showed.

And those who are saving, need to more than double their contributions if they are to have an adequate pension, according to financial adviser Hargreaves Lansdown Pensions.

"Many of the rest are going to get a very nasty shock unless the problem is tackled urgently" - Tom McPhail

The group warned that the UK's lack of retirement provision is beginning to resemble a "car crash in slow motion".

It said Government figures showed the number of people saving into a personal pension had fallen to 7.11 million in the 12 months to April 2008 from 8.05 million during the previous year.

At the same time, people paying into certain occupational schemes are failing to set enough aside.

The shift in the private sector away from final salary pensions and towards less generous defined contribution ones has made the problem worse.

Tom McPhail, head of pensions research at Hargreaves Lansdown, said: "A decent retirement income is perfectly achievable, however, it requires commitment and dedicated saving, it will not happen by accident.

"Some investors are making adequate provision for their retirement through a funded pension, but they are in a minority.

"Many of the rest are going to get a very nasty shock unless the problem is tackled urgently."