Young workers trapped in pensions crisis

Young workers trapped in pensions crisis.

Pension experts are adamant believers that young professionals face huge financial pressures because a pensions crisis is inevitable for them – leaving them to struggle to make ends meet in old age.

The main reason behind this is that millions of young workers are being ushered into company pensions, which are highly unsustainable today let alone in 40 years time.

The inadequacy of these plans is so bad that someone earning £50,000 in their mid-30s must save an extra £460 a month for the next three decades to secure a comfortable retirement.

Meanwhile, in October last year, the UK government proposed changes that saw the death of the final salary pension schemes.

As a result, as companies replace these expensive schemes with defined contribution alternatives, the retirement prospects for younger workers have dimmed. Instead of lifetime payout worth two-thirds of their final pay cheque, the pension one will get is now determined by how much they put in, the investment returns and interest rates at the time of retirement.

It therefore come as no surprise that figures from the Office for National Statistics last week showed that fewer people are saving into a company pension plan than at any point for the past 60 years.

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  1. August 9th, 2013
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