Wednesday, December 13, 2006

Government accepts people will lose money in its pension scheme?

According to a report in this morning's Times the Government's proposals for an automatic pension scheme unless one opts-out could result in people losing 85% of the money they save. Basically for every pound that these people put in they will get 15p back at retirement.

Whilst the scheme claims to be voluntary, its the opt-out that is voluntary, thus for many people who do not follow the news daily and have employers who don't provide financial advice, it is likely that it will be too late before they find out they are quite literally giving thousands of pounds away to the Treasury.

The most worrying thing though is that the report also quotes the Pension Reform Minister, James Purnell acknowledging that 10% of pensioner households in the scheme "may not see any benefit from saving" by 2050.

The Government claim that 10% is "only a small group of people", but given the well-documented fact that the population is aging, that 10% will undoubtedly be a significant real number when the day comes. Of course, in the short term Brown wants the money, so presumably that makes it alright.

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