New Home Owners And Snagging Forum
Investments => Cash ISAs and saving accounts => Topic started by: The Prophet on June 14, 2012, 09:08:03 am
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The latest pension survey figures show that pension contributions have fallen 8% over recent years and 5% in the last year alone.
The survey also shows that the public's expectation for what will receive from their pension pot at retirement are increasing so why the lack of interest?
For a start equity markets have remained virtually static for the last 20 years.
Bond yields are at an all time low, most yielding almost nothing and the vast majority of people only receive 20% income tax relief on their contributions.
QE is reducing the yield on UK government Bonds (Gilts) and, coupled with ultra low interest rates, annuity rates (what you can get with your pension pot when you retire) have fallen dramatically since the start of the financial crisis in 2008.
Lastly, after receiving the 25% tax-free amount, the remaining 75% of your pension pot must be used to buy an annuity of one sort or another.
This is normally only guaranteed by providers for five years.
Most annuities today would need to be paid in excess of 20 years just to return the original capital used to buy the annuity.
The real winners are the annuity providers, who after years of reducing the value of your pension through the fees they charge, get to keep the remaining fund after you die.
Until pension pots are returned to the individual on retirement to invest and control as they wish, rather than to buy an insurance company annuity, falling interest in personal pension provision should not come as any great surprise to anyone.
This will never happen because the government relies on the pension industry to continue to buy government bonds with the public's pension funds!
Who else is going to fund the national debt?