12 April 2012

What You Need for a Good Pension

Continuing my recent theme on bad news for retirees (I promise to be more positive in future!)... I see some recent research* has looked at the required pension contributions to achieve a reasonable pension income.

In 2000, the average 30-year old could have expected to make contributions of 12% of salary in order to provide two thirds of their final salary from retirement at 65. In fact, it has turned out that they would have needed to contribute 39% of salary to achieve that. And of course to make up the shortfall later means you now have to increase contributions even higher to make up the difference!

It's difficult to see how anyone can make much of an impact on this shortfall - it's unfortunately a question of lowering expectations: working longer, cutting back retirement plans, raising money against your house, not passing on an inheritance, and so on.

If only you'd been a teacher, a nurse, or a civil servant...

*Alexander Forbes National Pension Index

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