Pensioners will 'have to rely on savings as pensions shrink'

By Tom Farley, Wed 4 Jun 2008 - Published in Pensions

In the future people will rely on savings to get by in their old age, according to the director of Churchouse Financial Planning.

Keith Churchouse said that as pensions begin to offer smaller payouts he has no doubt that pensioners reliance on personal savings will increase.

He stated that he believed some people will opt out of making contributions to their pension fund under the personal accounts system that is to be introduced in 2012.

However, he added that how many people opt out will be dependent on the economic situation at the time.

Mr Churchouse also said that it was unclear whether people who opted out would still be entitled to receive money from the state.

He commented: "I don't know whether the government has the view that it you actively opt out of the scheme, there is going to be a caveat to say that you can't pop back to the state later."

The Fidelity Retirement Index shows that in retirement the average household is on track for an income of 42 per cent of what they are earning at the time they finish working.

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