Ways to overcome UK’s Pension crisis

On seeing the Britain’s pension system going down day by day, two main questions arises. These questions were raised by Channel 4 current affairs programme.

1.          Is there any end to Britain’s pension crises?
2.          Are the people bothered about the savings after retirement?

Below is the list of few problems that are aired on 18 November and possible solutions to them.

Issue 1: Are we saving enough
Blaming the UK government is not just the right thing to do coz the government has come up with auto-enrolment pension program a year ago. In which all the UK employees by default will be taken into their employer’s pension scheme. However there is an option given to employee to choose if he wants to go into auto-enrolment or to opt out.

But due to the benefits people are offered, it looks like most of the public are opting for outside pension schemes rather than government schemes.

In one of the research it’s found that one third of the Britain people have not saved anything for their retirement.

Best solution for this is, Start saving at an early stage

One to lead a great life after retirement has to start saving at the earliest. The early you start the more you can save. It doesn’t matter if you start with a less amount, gradually that will make a lump sum with which one can have a peaceful life after retirement.

Issue 2: A pension is probably not the best solution to save
A question raised, whether depending only on the pension is the correct way for retirement.

Answer to this is bit tricky, because one cannot solely depend on a house property. There were analyses carried out in comparison to owning a property verses saving in pensions. As per the analysis, though there are potential returns expected on owning a property, there are risks involved in it.

Best solution for this is, prioritize the benefits and losses of owning a property versus pensions.

Though the profit figures looks attractive in case of a property, it’s very hard to trust the real estate booming. There are chances that at the needy time, the prices of property can go low. But one can trust the Pension income.

Issue 3: Converting a pension plan into revenue with an annuity
Choosing the correct annuity at right time is the key thing one needs to take care of as one cannot keep changing the annuities because of the amount involved in it. So one should be very careful in selecting an annuity which can give a guaranteed income for a happy life.

Ros Altmann, former government pensions adviser said, “the complexity surrounding annuities worked against consumers”.

Best solution for this is, Enquire about the best type of annuity which yields best annuity rate

One should analyze the available annuities in the market thoroughly and has to decide which one would best suit their family needs. One has to see whether the annuity pays money every year irrespective of the ups and downs in the marker, or has to check if the annuity pays earnings to the husband or wife after the pension holder passes away.

Issue 4: Pension scams
With the increase in people opting for outside income schemes, lot of companies have taken birth in recent times with the service like pension liberation or unlocking.

Generally these companies will target the people who are in need of money but have less amount of pensions in their account and mesmerize these people by saying they can withdraw money from their retirement funds when required. But at a later point of time it’s very shocking to know that the customer will be left out with very less amount or no amount in their retirement fund because of the fees and the service charges that are involved with pension liberation.

Best solution for this is, avoid the crooks

Make sure that you do not become a pray for these companies. Pension investments are meant to lock your money till your retirement. So avoid if any one says that they will provide option to gain access to your money early.