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&#39Pension savers waste cash as Mig rises&#39

Thousands of pension inv estors could still be saving for no reason despite Govern ment attempts to reform the minimum income guarantee, say IFAs and pension providers.

They claim many people will need pension pots of at least £100,000 to reap any ben efit from their savings after Chancellor Gordon Brown revealed plans last week to raise the Mig to £100 a week.

They argue that despite Government pledges that pensioners will always benefit from saving, the pension credits represent poor value and many savers would have been better off not saving.

The Chancellor unveiled plans in his pre-Budget statement to raise the Mig to £100 by 2003. He also announced plans for pension credit payments designed to encourage modest earners to save and not rely on the Mig.

IFA Wentworth Rose Ret irement Services says, based on standard annuity rates linked to inflation, its calculations suggest that a woman aged 60 looking to provide £100 a week income for herself would need a pension pot of £100,000 while a 65-year-old male would need to have built up a fund of £80,000.

Wentworth Rose managing director Philip Rose says: “These figures just do not stack up, with a 50-year-old man being asked to save £20 a week in a stakeholder pension when they are better off with the maximum benefit from the Government.”

Scottish Life head of communications Alasdair Buch anan says: “The pension credit is still poor value beca use savers only get back 60p for every pound saved.

“If people have to rely on decision trees, they might not see this unless they took fin-ancial advice.”

Torquil Clark pensions development manager Tom McPhail says: “Both the Mig and the pension credit are phenomenally complicated.

“If it is difficult for the pension industry to understand, then how are confused ret-ired people supposed to make sense of them?”

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