Private sector workers will ‘retire in poverty’

| March 4, 2008 | 0 Comments

A report from the think-tank, Policy Exchange, has discovered 75% of private sector workers are facing poverty in retirement. The organisation warned the scale of Britain’s pensions crisis is ‘worse than originally feared’.

According to the report, they do not have a company pension or any other type of pension savings apart the State pension, which is £87.30 a week.

It is believed that many will have to continue working into their late sixties or seventies in order to meet household demands. Research shows that 1.2 million pensioners are already working with the number increasing.

Private sector workers make up approximately 80% of the workforce and one of the major problems for this group of people is the disappearance of generous ‘defined benefit’ pension schemes.

The report established that around 3.4 million private sector workers have a ‘defined benefit’ scheme, typically a final-salary one. This has dropped considerably since 1991 when 5.6 million were members of such a scheme.

Author of the report, Nicholas Hillman, said too many working-age people face poverty in their retirement. If we do not make changes now, this situation will continue for decades to come.

Recent research from insurer AXA revealed that 75% of British workers have some form of pension provision, with the average person starting to save towards retirement at just 28.

The insurer revealed that Britons begin saving earlier than those in France and Spain who start saving at an average of 35, while those in Hungary put off saving until they are 38.

71% of working Britons said they were making some form of retirement provision, compared with an international average of 54%.

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