The pensions gap

“There is a crisis in pensions today which affects the majority of people in the UK – and this probably includes you”.

Unless we take action, most of us will have a much smaller pension than we expected to have –  not enough to support the type of lifestyle we hoped for. Why?

  • We are all living a lot longer than we used to – good news, maybe but more expensive to pay for our retirement years.
  • Interest rates and investment returns are much lower than they used to be so pension funds build up more slowly and then every £1 of pension requires a larger fund to buy it!
  • Reductions in tax relief on pension.
  • Tougher accounting rules for companies who operate pension schemes.
  • A wave of closure of pension schemes to new entrants – or cuts in the pensions being promise.

All of this shifts responsibility for pensions on to individuals. So if you already have your own pensions, their value has almost certainly declined too.  Most people now have a ‘pension gap’ whether they know it or not – the difference between the pension needed for a comfortable retirement and the pension which existing arrangements are likely to purchase.
Have a look at our pension gap ‘visualiser’, which describes some of the components of your pension gap and gives you an overview of how you can begin to close it.

thepensionscrisis.com  is all about helping you to understand how you can to start to close your own pensions gap. It brings together people with a common interest in sorting out their financial future. Here you can exchange experiences – how you rated your adviser, which investment companies gave you the best information – in fact anything you want to talk about. Over time we hope that much of the material on thepensionscrisis.com will be provided by you. You can tell us what you think now by contributing to our articles.

What is the pensions crisis?  It’s the fact that unless we take action, most of us will have a much smaller pension than we expected to have – and certainly not enough to support the type of lifestyle we might have dreamt of having in retirement.

The crisis has been cause by two major changes in the last few decades: changes which are positive in many aspects of our lives but when combined have, ironically, created a major pensions crisis:

  1. The first change is that we are all living a lot longer than we used to – so the cost of buying a pension for all those years in retirement has shot up.
  2. The second change is that interest rates and investment returns are much lower than they used to be, which means that every £1 spent on a pension earns lower returns, making a pension even more expensive.

These problems have been made even worse by reductions in tax relief on pensions and tougher accounting rules for companies who operate pension schemes. Both have added to the cost of buying a pension, and the result has been a wave of closure of pension schemes to new entrants – or cuts in the pensions being promised.

The overall effect is to shift responsibility for pensions on to individuals – that’s you. If you already have your own pensions, their value has almost certainly declined too. Most people now have a “pension gap” whether they know it or not – the difference between the pension needed for a comfortable retirement and the pension which existing arrangements are likely to purchase in practice.

This website is all about helping you to understand how you can to start to close your own pensions gap. No-one else is going to do it for you: it’s totally up to you.

You can dip in and out of this site and use it any way that suits where you are in your life and how much (or how little) you know about pensions. We try and avoid using technical language as much as we can, saving that for the nitty-gritty of pensions plans and the complicated language that they tend to use (and we have provided a glossary). A good place to start is our pensions gap ‘visualiser’, which describes some of the components of your pension gap and gives you an overview of how you can begin to close it.

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