October 11, 2004

Pension bubble burst

by brian_turner

I don’t have a pension. Should I be worried?

Question is – should I really care to invest in a pension, when there are other savings schemes out there, that might offer greater reliability and profitability?

After all, those investing in pensions lost out to the stock market falls in 2000 – but those who saw the clear warning signs and put the money into property, would be absolutely laughing now.

What does a pension offer that other saving schemes cannot rival? Is putting away money that cannot be touched or controlled, for decades, really a sound investment?

Once upon a time pensions were worth taking out, because the government ensured that there wa value in them, with a 25% contribution to private pensions.

Now it’s hard to see pension schemes as anything other than one among many alternatives.

And as the BBC reports here, the entire pensions situation is pretty confused:

While the government says the pensions gap is caused by a mix of undersaving and early retirement, the Tories have blamed Chancellor Gordon Brown’s removal of pensions tax breaks in his first budget.

Shadow Pensions Secretary David Willetts said the leaks confirmed that people were not saving enough.

“Gordon Brown’s first action was his ’5bn annual tax on pension funds and the Government has consistently underestimated the amount we are setting aside,” Mr Willetts told the Sunday Times.

Until two years ago official figures showed ’86bn a year was being put into private pensions by firms and employees.

The newspaper says the true figure is now believed to be ’40bn.

Discuss the issue here: Do you have a pension?

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Story link: Pension bubble burst

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