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Why saving for retirement shouldn’t be complicated – go figure

The pensions system is too complicated and must be simplified if people are to save, says PriceWaterhouseCoopers (PwC).

A widely-covered report from the ‘Big Four’ accountancy firm urges the Chancellor George Osborne to urgently reform the personal pension system and rebuild it “in a language people can relate to”.

This message will come as no shock to those who are familiar with the ethos of the Family Building Society and our sister Company the National Counties Building Society, and perhaps what would inspire my 12-year-old daughter to say: “Like, doh!” PwC argues the current system is putting people off saving – particularly the Government’s target group of women and younger workers. It also suggested that contribution levels are insufficient to provide the retirement income workers expect.

On average says the report, workers expect a retirement income of £22,000 a year and calculates an employee starting work at age 22 would need to save 15 per cent of their annual salary to attain that. Only one in 20 workers is putting aside more than 10 per cent of their salary towards a pension – with the average being only 5 per cent.
Among PwC’s suggestions is:

• A single rate of tax relief on pension contributions
• Taxing money put into pensions in return for an up-front contribution from the Government
• Improving financial education

This all sounds familiar, strangely.

For those of us, like The Family Building Society, who have campaigned for Plain English in financial documents this will come as a welcome boost. By our measure what makes it less complicated and more attractive is, wait for it, planning. As well as a pension there are numerous ways of looking after your plans for a comfortable retirement – mortgage planning, Inheritance Tax planning and good, solid advice are key among them.

We call it Later Life Planning, and because it’s a cause close to our hearts, we have organised a free seminar on 10 November at Epsom Racecourse where you can hear our expert partners give you the important facts you may need to consider – it’s all part of the Family Building Society ‘plain speaking’ service.


By Steve McDowell

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