The Chartered Insurance Institute (CII) report published today said the UK financial services sector must ‘embrace reforms’, since the retirement savings deficit is expected to touch £9 trillion.
The report says the average pensioner’s savings will be inadequate to take care of his daily expenses and long-term care costs, with the average annual shortfall estimated at £16,700 per person. The £9 trillion pensions saving deficit has been calculated under the assumption that pensioners will be able to maintain their present retirement income over the next 40 years, one in four pensioners will require long-term care and all will have outstanding debts to settle.
Listing out the ‘significant barriers’ to long-term savings, the CII report says future uncertainties, little knowledge about challenges individuals are likely to face while entering retirement, scandals denting public faith in the financial system and a complex tax-system act against future pensioners.
“It’s clear the scale of the problem is massive, but not insurmountable”, said CII director of policy and public affairs – Mr. David Thomson.
“The financial services sector must shoulder its responsibility and embrace reforms in legislation aimed at improving the standards of living and levels of trust in financial products and providers”, added Mr. Thomson.
“Equally, these reforms must be communicated”, he stressed.
Political parties across the board need “to provide the public with certainty” the future rules.
“The next generation faces a different world, with increasing life expectancy, the decline in final salary schemes and lower annuity rates. They are going to have to take greater personal responsibility for their retirement”, said pensions minister Steve Webb in the report.