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Warning of shortfalls over move to DC plans

The millions of employees who have been moved from defined-benefit to defined-contribution schemes are in the dark about the retirement shortfall they will face, according to Towers Perrin.

The benefits consultancy says that many people are unaware of the deficit they face and must first establish the extent of the shortfall and work out how they will make up the loss. It says this could involve people making difficult decisions and sacrificing their lifestyle.

Towers says a 22-year-old single woman on £12,000 a year who was due to retire on a pension of two-thirds of her salary would have to contribute an extra 7 per cent of her salary to get the same pension through the new moneypurchase scheme.

The company says this would mean the woman sacrificing her annual holiday and eating out with friends.

Principal Robert Ivey says: “The plain truth is that most people remain blissfully una-ware of the true extent of the financial hardship they may suffer in later life. Even if they were to face reality, it is unlikely that they would be prepared to make big enough sacrifices to allow them to save the extra they need.

“However, it may not all be doom and gloom. A realistic assessment of the income needed in retirement might well show that the level of pension they are aiming for is over-ambitious.

“They will probably have paid off the mortgage, the children will be off their hands and expenses such as work clothes and the cost of travel will no longer in incurred.”


Boost for ScotLife pension business

Scottish Life increased pensions business through IFAs by 39 per cent to £118m annual equivalent premium for the year to September 30, up from £85m the previous year. Group occupational pension business increased 52 per cent to £41m from £27m over the same period, group personal pension business grew 27 per cent to £31m from […]

DWS builds block of 25 stocks

DEUTSCHE ASSET MANAGEMENT DWS UK OPPORTUNITIES FUND Type: Oeic Aim: Growth by investing in UK equities Minimum investment: Lump sum £1,000, monthly £25 Investment split: 100% in UK equities Isa link: Yes Pep transfers: Yes Charges: Initial 4.25%, annual 1.5% Commission: Initial up to 3% Tel: 0800 917 0005 The panel: David Flowers, director, Ronald […]

Premier Diversified Property Fund – Premier Diversified Property Fund

Monday, 28 October 2002 Type: Oeic Aim: Growth by investing in UK commercial property Minimum investment: Lump sum £11,000 Place of registration: Isle of Man Investment split: 100% in UK commercial property Isa link: No Charges: Annual 1.5% Commission: Initial 3% Tel: 01624 897572

RJ Temple in remortgage and equity-release deal

IFA RJ Temple has signed a deal with national broker Mortgageforce to handle enquiries about remortgages and equity-rel- ease products.Mortgageforce estimates that the deal could generate £50m on the back of RJ Temple&#39s new inheritance tax planning campaign. RJ Temple will continue to use Savills for referrals on standard mortgage business.But it felt that Mortgageforce, […]

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Johnson Fleming set to hold auto-enrolment support webinar

Two years since the process of auto-enrolment began, the looming re-enrolment deadline provides the perfect opportunity to assess whether the support you have in place, which may well have been hastily selected at the start, is fit for purpose. Johnson Fleming is holding a webinar on 10 September at 11:00 to discover the key issues and concerns you should consider when thinking about your current support options.


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