Many pensions are ‘poor value for money’, warns watchdog
A fifth of UK workers predict that they will never be able to completely stop working, according to research from HSBC.
Retirement prospects were even worse for people who lived alone – with 36 per cent expecting to work indefinitely, compared to 20 per cent globally.
HSBC surveyed 16,000 people in 15 countries – including 1,050 respondents in the UK – for its report, The Future of Retirement.
It found that people’s expectations of a work-free retirement dwindled as they got older – with 20 per cent of 55- to 64-year-olds expecting to continue working indefinitely, compared with 15 per cent of 25- to 34-year-olds.
The study also suggested that UK workers who did eventually retire might not be able to maintain the lifestyle that they wanted. Half of those surveyed in the UK who had already retired reported that they have been unable to realise their plans because they had less money to live on than they had envisaged.
Two-fifths said that financially, they had not prepared adequately or “at all” for a comfortable retirement. But only 2 per cent of these respondents said that they were prepared to go back to work to make up the financial shortfall – compared to 44 per cent in the other countries polled.
The global picture also revealed that while many people around the world would be forced to work longer than they had planned, a significant proportion looked forward to working in later life. One-quarter of international respondents said that they wanted to start their own business in retirement, compared to just 7 per cent of Britons.
Christine Foyster, head of wealth management at HSBC, said: “Today’s workers should prepare for retirement as early as possible to have some certainty for retirement. Life is full of reasons to prioritise short-term spending over longer-term planning, but the sooner people start saving the less likely they will have to rely on working in old age.”
Meanwhile, the Office of Fair Trading (OFT) has this morning condemned some pension schemes in the UK as “poor value for money”.
Its study of the £275 billion defined contribution workplace pensions market found that as much as £40 billion worth of savings could be giving poor value to scheme members.
The OFT warned that many employers “lack the capacity or incentive” to make good value judgments, with that employees were also confused by the complexity of some pension plans.
The consumer watchdog’s recommendations included new powers for the Pensions Regulator, measures to make pensions schemes more transparent and the suggestion that pension providers set up governance committees to help serve members’ interests.
Pensions minister Steve Webb has said that the government would implement a number of reforms following the OFT’s report.