http://www.telegraph.co.uk/finance/pers ... soars.html


Hardly surprising with the impacts the crash had on pension savings then the double whammy of ultra low interest rates which are used to set annuity rates. So the majority are having to stay on because all the promises of insurance companies and governments have decimated their savings and retirement options. Unfortunately this will be the norm for people over the next three years at least as interest rates will be too low to enable many to retire on an adequate pension.

Oh so sodding true.

With stock markets plunging again, and some thinking that the US market and possibly the UK stock market are still too expensive considering the outlook, then retirement funds will suffer. Pension liabilities at the big firms will mean that within a decade the final salary scheme will be dead, with just MP's having a final salary scheme. In order to provide a two thirds final salary with interest rates at 0.25% means that employers will need to have upto 268 times the final salary accumulated. That is impossible. Let alone for companies to achieve for everyone. So expect a lot of pension schemes being closed to all members, and a switch to defined contributions. Add in poor returns over the last decade and you can see what a mess everyone is in.

The FTSE jan 1985 to Jan 2010

With negative returns over the last ten years then the whole insurance and pensions industry could face very tough times ahead. If people put money aside and would have actually been better off in a ISA even before the annual investment fees then the insurance industry looks doomed. It might also explain why insurance rates will go up for years even if claims go down because they do not have the investment returns to maintain them.