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BoE Warns on Pension UncertaintyBy: Elizabeth Rigby
The
Bank of England warned that even if people save for their old age, market
volatility could mean they could end up with less than they hoped for in
retirement. The
research, part of a wider study on the implications of an ageing
population by the Financial Services Authority, urges people to start
thinking about retirement sooner rather than later if they want to retain
a little glean to their golden years. "One
of the effects of people living longer is that they have to spread their
lifetime incomes over more years of life, implying a need for saving when
working," said Garry Young, author of the study. However,
the report goes on to stress that those relying on financial market
returns to top-up their pensions "could be much less lucky than those
who enjoyed the high returns of the 1980s and 1990s", particularly as
provision shifts from the public to the private sector. Such
patterns could have wider macroeconomic repercussions, warned Mr Young, if
"lower expenditure for the retired was intensified by lower spending
by those of working age who become concerned about their own retirement
income." The
research adds weight to the growing concern among policymakers over
provision for dramatically ageing populations across Europe as people live
longer and birth rates fall. Such fears have been compounded in recent
weeks by market turmoil coupled with the poor performance of some pension
funds. The
average age in the UK is set to rise from 38.6 years in 1998 to 41.9 years
in 2021, with the number of over-75s rising sharply from 4.4m in 2000 to
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