The gap in pensions is expected to grow further in 2013, according to predictions by the financial advisor Bestinvest.
According to Mr Hollands, the managing director of Bestinvest, “many Britons are reluctant to tie their cash up for the long term in a pension.” This is in part a result of uncertain economic times, as well as poor public perceptions of the pension scheme industry with regards to rule altering and hidden charges.
Similarly, with cuts to the annual state pensions announced in the Autumn Statement, people appear to be less willing to enter personal pension schemes; but have instead started looking to ISAs and Self-investment Personal Pensions (SIPPs) which offers more competitive rates and wider choices. While ISAs and SIPPs are becoming more popular, personal pensions do offer benefits for high earners.
Many companies are also expected to offer automatic pension enrolment for staff. According to Robin Hymes, head of marketing at Capita Employee Benefits, employers should do more to promote saving while working. However, the TUC warns 420,000 could miss out on workplace pensions due to government’s rise in the pay threshold for automatic workplace pension enrolment.
Moreover, those pension decisions might impact the ability to get an approval for a retirement mortgage.