Millions of pensioners are having their weekly income wiped out by basic bills, without a single penny to spare, research revealed yesterday. A typical couple receives a weekly income of £207.15 - but will spend £207.24 on food, fuel, housing and transport, it said. This is before they have spent any money on the long list of other costs, such as a new pair of shoes, a holiday or a present for a grandchild.
Half of workers do not know they could soon be automatically enrolled into a Government-run pension scheme if they are not in a works pension already. From October next year, employers who do not already offer a company pension to staff will have to offer the Government's new savings scheme, known as Nest (National Employment Savings Trust). Unless workers ask to opt out, and provided they are over the age of 22 and earning at least £7,475, they will have money deducted from their salary each month to go into Nest. It means that from next year, someone earning £22,000 a year, and eligible to save via Nest, will see £56 deducted from their monthly pay. Nest is clearly going to take a few people by surprise,' says Ian Martin, director at HSBC.
What also will come as more of a shock is that around 40 per cent of bosses will cut or freeze their workers’ salaries when new pension rules are introduced next year, a report warns today. The rules will force every boss in Britain to pay into a company pension for each of their workers for the first time in history. They will be required to pay the equivalent of at least 3 per cent of a workers’ salary into a pension. But the report, from the Institute of Directors warns employees’ salaries could be ‘hit’ as bosses resort to desperate measures to try to recover the money lost on the extra pensions bill. When asked how they will find the money, 33 per cent said they plan to ‘freeze’ salaries and 9 per cent said they will ‘decrease salaries.’
And for those already in a works' pension, the UK's 6,533 defined benefit pensions, including final salary schemes, had a collective surplus of just £2.3 billion at the end of April, down from one of £45.5 billion in March. New accounting rule slashed £43billion off pension funds - because of worries that we are living too long. If the accounting assumptions had not been changed, pension funds would have ended the month £37.2 billion in the black. The accounting shake-up came despite the fact that the total value of schemes' assets rose by 1.5 per cent to £1.003 trillion during the month on the back of stock market gains. The overall rise in life expectancy is being driven by fewer people taking up smoking, and healthier lifestyles in general.