Amid the cost of living crisis, ITV Tonight has heard that for some, pensions are taking a back seat.
Pete Glancy, Head of Pensions Policy at Scottish Widows told the programme:
“11% of people have told us they're stopping or reducing the amount of money that they're putting away for retirement ... not only do they miss out on the contributions that would have gone into their pension, but they also lose out on potentially decades of investment returns….All of that can amount to thousands of pounds.”
However, the good news is that more of us than ever before are saving into a pension. And some companies offer very generous pension packages - like Stakester, an online gaming company in central London. In tonight’s programme, reporter Michelle Ackerley meets staff there whose entire minimum pension contribution is paid by their employer…but with many of the staff aged under 30, she finds out that saving for retirement is near the bottom of their financial priority list.
Danielle Richardson, financial expert at Which? Magazine, is on hand to set a challenge for two of the employees - can they live on their predicted pensions for a week, and will that shift their pension up the priority ladder?
However, some who’ve saved for years into a company pension may not be so fortunate.
Tonight travels to Port Talbot, South Wales, where the steelworks has been the heart of the community for almost a century. In its heyday, it was run by the national British Steel Corporation, which had a very generous pension scheme - and when the steelworks was privatised, successive owners agreed to honour it.
But in 2015, with owner Tata Steel was at risk of insolvency, the generous pension scheme had to go.
The steelworkers were given options - including a new, less generous company pension scheme. Or, they could withdraw the cash in their pension pots and reinvest it elsewhere. Nearly 8000 of the steelworkers withdrew their entire pension pots.
However, this March, the National Audit Office found that at least 47% of the steelworkers who transferred out of their ‘gold plated’ pension scheme were given bad advice by financial advisors. We speak to former steelworker Adrian Burns, who potentially lost up to £120,000, after he withdrew his pension funds.
The Financial Conduct Authority (FCA) told Tonight it is investigating 30 businesses or individuals who provided advice on transfers, and that only firms with the right skills and experience will provide advice in future – over 700 have stopped doing so due to their work.
The Financial Services Compensation Scheme (FSCS) told Tonight it is committed to supporting the affected steelworkers and each claim will be considered individually. Together they have elicited over £70m in compensation, and the FCA has proposed a scheme which should see firms pay over £70 million more.
On the Breadline - Pensioner Poverty
Sadly, pensioner poverty is on the rise, with around two million pensioners struggling to afford the basics.
There is help available in the form of pension credit. However, many eligible pensioners fail to claim it.
Morgan Vine, Head of Policy at charity Independent Age told the programme:
“Currently, about 850,000 households who are eligible for pension credit don't receive it….We did some work with Loughborough University - it's approximately £2 billion not received - and we worked out what would happen if you gave that money to everyone that was eligible. The state would make back about £4 billion…And that's because when people don't receive pension credit, but they need it, they are making really tough choices that are impacting their health. So often they end up in hospital.”
Widower Yvonne, 76, struggled to live off her pension after her husband passed away. She felt she couldn’t even afford to leave the house, and became increasingly isolated. But Yvonne discovered she was entitled to claim pension credit - and it changed her life: “It lifted my mood because I was so depressed, being stuck and not having money to just do the simple things in life, you know, meet up with friends. I mean, that's what life is about, human contact. And without it, you just sort of shrivel up.”
Pensions Tracing Service - https://www.pensiontracingservice.com/
Pension Credit - government guidance - https://www.gov.uk/pension-credit/eligibility
Independent Age - https://www.independentage.org/
Scottish Widows Retirement Report 2022 - https://www.scottishwidows.co.uk/about_us/media_centre/reports/retirement-report/
Report fraud - Action Fraud - https://www.actionfraud.police.uk/reporting-fraud-and-cyber-crime
Working Wise - https://www.workingwise.co.uk/