According to the Workplace Retirement Income Commission, around 14 million people are not saving into a workplace pension scheme. This means that the majority of those 14 million people could end up without any money when they retire.
The System is Considered Useless by Many
People who invest in such a scheme, usually have to pay too much money for a service which does not return too much money, and which is very complicated. Many believe that this situation requires a change, and urgently. Lord McFall, the Labour former chairman of the House of Commons’ Treasury Committee was asked to investigate the situation.
The study revealed the fact that many of the workers who do not save for a pension, do not do it because they consider the deal to be useless. They have stated that when the deal will be changed, they will be willing to invest in it. There are too many people who invest in a service which is not useful for them, and which costs them too much money. They pay too much, and the money they save is not enough when they retire. The current system is not safe and worthy enough.
Because of these aspects people are wondering if the pension industry is working in their interest, or only to make money. Experts have stated that people will need to make more money from the pension in order to be interested in the system. Currently many of them spend all their money without thinking about the future, and when they reach retirement age, they discover that they are in poverty. Many people do not care about the pension, and that is alarming. The review did not take in consideration the public pensions.
People Need to Start Investing
The government made some changes; starting with 2012, the workers will be automatically included in a pension scheme, unless they opt out, or have a very low wage. The reviews suggested that the government should increase the minimum amount of money which the workers should invest. It also stated that the government should introduce lower-cost pension schemes, suitable for anybody. The new system should encourage people to save money, and should be able to offer more money when these people retire. The review urged people to start saving because otherwise they will find themselves in a very precarious situation.
One of the factors which need to be taken in consideration is that people live for a longer period of time than in the past. It is very important for the government to convince people that it is very important to incest money in a pension system, because otherwise they will have a very difficult life. They retire when they are 65, and they might live up until their 90s. In that case they will have 25 years of poverty. In that case they will have two options: continue working until they can, or live in poverty.
The situation is similar in numerous countries of world, not just in the United Kingdom. The United States of America is going through a similar situation.