The UK pensions industry is in dire trouble. However, even as the UK Office for National Statistics announces staggering levels of unfunded liabilities the government, companies and individuals would still prefer to bury their head in the sand and hope the problem will go away. It won’t.
The ONS announced that the aggregate pension liabilities had risen by £1 trillion in the past five years. Experts believe that even in the private sector where pension funds are supposed to sufficiently funded to meet their liabilities, only one third is covered by assets that are invested today.
An article in the Independent written by Kate Hughes highlights that younger works could end up having to fund the previous generations pensions as well as their own. Already there are suspicions that companies are not paying wage increases because they are having to set aside money for existing retirees in their pension schemes and the funding of future pension payout.
There are some signs that individuals are taking modest steps to increase their pension savings. UK employees contributing to their pension fund has increased from 47% of all employees in 2012 to 73% in 2017. However, their contribution levels are still very low. Almost half of the employers are contributing less than 2% of pensionable earnings in 2017, compared to 6% in 2012.
This article was attributed and provided by PG International