Pensions have become an increasingly contentious issue in recent years, resulting in strikes by a wide variety of public sector employees. Many of the traditional final salary schemes are closing to new members, and employees are expected to contribute more and retire later.
Private sector employees mostly in defined contribution schemes and personal pensions have seen annuity rates halved over the last twenty years, and have had to increase contributions, postpone retirement, or lower their pension expectations in consequence.
The latest pension legislation obliges almost every employee to join a pension scheme. A proposal announced in the 2014 budget removes the requirement to purchase an annuity. Is that a sensible suggestion? How should we decide?
People find pensions confusing. Few understand them, and a reputation for self-serving advice from the financial sector has left them mistrustful.
This article outlines the way pensions have changed since the 1940s and explains the reasons behind these changes, and what we might expect in future. It examines the choices we must make in providing for retirement and the way the different types of pension work, all in plain English.
1.) Pensions for an Ageing Population
2.) State Pension
3.) Pensioner Incomes
4.) Private Pensions
5.) Defined Benefit (DB) Pensions
6.) Public Sector Pensions
7.) Defined Contribution (DC) Pensions
8.) Pension Fund Performance
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About the Author
Dave Treanor recently retired as managing director of M3 Housing and secretary of the National Housing Maintenance Forum.
He wrote Housing Investment Appraisal for the National Housing Federation, and developed financial appraisal systems widely used by housing associations.
Prior to that he spent many years working with housing cooperatives.