A massive "black hole" in the pension industry could leave millions in poverty when they reach old age, the Pensions Commission warned today.
Britons must find an extra £57 billion a year to bring pension savings up to the European average of around 11 per cent of GDP or face working beyond the current statutory retirement age.
The commission, headed by former CBI chief Adair Turner, said in its report major reforms to the pensions industry were needed, because individuals are simply not saving enough for retirement.
"Now we've got to face the reality," Mr Turner said. "Either pensioners will become poorer relative to the rest of society, or taxes have to go up, or people have to save more, or they've got to retire later.
"There is no alternative to these four options," he added.
If things remain unchanged 12 million pensioners will face poverty in retirement, the report found.
But the report stated: "No single solution makes sense."
It also claimed that, without concerted efforts by the government, it is "unlikely" that the current systems, private and public, will solve the problem.
Kay Carberry, assistant general secretary of the TUC, said: "It is very plain that the voluntary [contribution] system we have got is just not working.
"We are all not saving enough. Our employers, by and large are not contributing enough to our pensions and the basic state pension is too low and over reliant on means testing."
 © |
