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Report: Pensions down 75 percent in 10 years

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by Elaine Frei
Report: Pensions down 75 percent in 10 years

A new report by consultancy Watson Wyatt (NYSE: WW) says that pensions payouts in the UK have fallen by more than 75 percent in the past ten years. While annuity rates have stopped falling and even rose a bit last year, the report says that low returns on investments and dropping annuity rates have combined to send pension income down 78 percent for men and 76 percent for women when they have saved identical amounts. The report cites increased longevity as another factor in falling pensions.

The report urges those with pensions to either work longer or save more, although it says that those who have a defined pension from their employer are in a better position in regard to their pensions. In addition, the government is asking 10 million workers who do not currently have pensions plans to make contributions to personal pensions schemes. The current declines in pension incomes, however, have made many workers hesitant to initiate such plans.

In a separate report, Aon Consulting (NYSE: AOC) said that equities markets declines last week exacerbated pensions problems by increasing the pension deficits of the UK’s top 100 companies by £18 billion, reversing a recent trend in declines in pension deficits. It was the biggest weekly decline since the FRS17 accounting rule was enacted in 2003. FRS 17 measures the extent of UK company pension deficits.

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News posted: March 5, 2007

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