View more on these topics

&#39Saving for retirement a waste for most investors&#39

Saving for retirement is a waste of time for the majority of investors, according to new research.


Liberal Democrat figures reveal the majority of people would be better off not saving at all and relying on state benefits. Former programme director at the Institute for Fiscal Studies and LibDem pensions spokesman Steve Webb has used Department of Social Security statistics to calculate investors would need a pension pot of £41,000 to buy an annuity equalling state means-tested benefits. This figure dwarfs the average pension fund used to buy an annuity this year, estimated by industry experts to be around £25,000.


Opposition parties and consultants say the situation is set to get worse because the proposed state second pension is linked to income levels while the basic state pension is linked to prices.


Bacon & Woodrow senior consultant Raj Mody estimates to buy an annuity linked to income levels would cost around £80,000.


Webb says: “The Government needs to resolve the fundamental contradiction between wanting people to save and relying on means-testing.”


Tory MP Howard Flight attacked the fact that the average amount to be accumulated under the stakeholder, which he estimates at £85,000, will only equal the minimum income guarantee. Speaking in the Commons, he said: “Savers would be saving £85,000 for absolutely nothing and would end up in the same position, free under the state pension.”

Recommended

Scottish Friendly ups with-profits bonuses

Scottish Friendly has announced an increase in the policyholders&#39 bonus applicable the start of this month.Payouts for plans maturing from 1 April 1999 will increase for all policy holders.For a male aged 30 at the start of a policy, investing £50 a month on a 25 year endowment, the payout would be £95,294 up from […]

Policy Master ditches transaction charges on EDI

Software provider Policy Master has announced that it is dropping EDI transaction chargesBusiness development director Mike Dodd says: &#34This will give insurers the ability to easily segment their rating for partner brokers who might have special rating.&#34In the past few years many of the software houses have recouped their investment and made considerable profits via […]

ICS opens way for 17 firms&#39 clients to claim compensation

The Investors Compensation Scheme is allowing customers of 17 former investment firms to apply for compensation.The firms are David Bodill Independent Financial Services of Burnley Lancashire, Greystone Investments of Altricham, Cheshire, Joseph Teppett & Company Insurance Mortgage Consultants of Modbury, Devon, Brian Sloan Independent Financial Advisers of Maryport, Cumbria, KJ Earl & Associates of Dunstable, […]

Venture capitalists give warm welcome to Budget

The British Venture Capital Association has given a rousing welcome to the Budget which it says has implemented many of its own pre-budget recommendations.BVCA taxation committee chair Jonathan Clarke says: &#34The BVCA is delighted that the Budget has focused on risk takers with the new Enterprise Management Equity Incentives. This was the key focus of […]

What's going on in the 'offshore' world?

Graeme Robb, Senior Technical Manager at Prudential, explores the current state of the nation for offshore issues and highlights areas which may be particularly relevant to advisers. In the context of insurance companies, ‘offshore’ can be a relatively straightforward matter. Like their onshore equivalent, offshore bonds are ‘non-qualifying’ for tax purposes, meaning that all gains […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment