Young
people could be forced to work until they are 72, because of the decline of
work-based pensions.
A
survey by actuary firm Hewitt Bacon & Woodrow, said the average
contribution into a money purchase scheme was now 10 per cent of salary.
This
is short of what many of those required to fund pensions aspire to – the
mythical two-thirds of final pay, it said.
According
to the survey, very few workers understand the risks involved. Of 500 employers
surveyed, nearly 80 per cent said their members did not fully understand that
the responsibility of retirement funding had been passed to them.
At
the same time, employers have shifted people on to money purchases schemes, and
many have also cut contributions.
According
to Hewitt’s survey of 500 companies, employees are contributing 4 per cent of
their salary to their pensions, and employers 6 per cent.
Chris
Cairns of Hewitt, said: "Employees have failed to grasp the implications
for their retirement plans and are not setting aside anything like realistic sums.
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"Our
analysis shows that based on the average level of defined contribution, an
employee joining at age 25 will have to work to age 72 to earn a two-thirds
pension – and this would be by investing in shares, which carries a risk."
