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Axa research puts case for compulsion

Axa Sun Life has renewed calls for pension compulsion after research

showing most of the stakeholder target group is not putting enough by for

retirement.

It is calling for an industrywide debate about stakeholder with the Government.

Axa Sun Life&#39s retirement planning “barometer” reveals 20 per cent of the

stakeholder target market is not making any retirement provision at all

while the remaining 80 per cent is not investing a sufficient amount for a

secure retirement.

The survey found that 64 per cent of respondents seek advice before buying

long-term savings plans, while 33 per cent use their own judgment and 3 per

cent could not decide either way. Consumers under 55 are more inclined to

seek advice than the over-55s, with 69 per cent saying they would get

advice before buying long-term savings plans.

Head of pensions development Paul Smith says the Government has either to

accept that the state will have to pick up the tab or introduce compulsion.

It polled a nationwide cross-section of adults aged between 20 and 65 and

earning over £10,000 a year, in line with the Government&#39s target

stakeholder group. Two-thirds believe they are set for a comfortable

retirement despite the fact that only one in six will have adequate income

when they reach retirement age. Nearly one-third will have to rely on some

form of state benefit. Four in 10 people anticipate having to pay for

hospital treatment when they retire.

The research reveals there is a growing realisation of the need for

saving. But Smith says despite the general acceptance that self-provision

will be more important in the future, there is a huge gap between consumer

expectations and the likely reality of their retirement. Over half expect

to retire before they are 60.

Smith says: “Presumably, the 20 per cent not making any regular saving are

either content to rely on the state or simply cannot afford to save. This

is a worry as the people we surveyed are the primary target group for

stakeholder pensions.”

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