Eight in ten financial advisers believe the government will not be able to close in on the country's £27bn savings gap, according to new research.
A survey conducted by Winterthur Life at its recent roadshow attended by 1,000 IFAs, finds 67% of respondents think the government, with its new mandate to tackle pensions, will make ‘little impact’ in plugging the gap and 15% believe it will not impact at all.
Chief executive officer at Wintethur Life, Mike Kellard, says its firm's findings indicate there is no ‘silver bullet’ to compel future retirement savings, despite the planned radical shake-up under the new government.
He says: “If there is no appetite or demand, which I believe strongly is currently the case, then it doesn’t matter how simple or cheap saving for retirement is made to be, it will undoubtedly fail.”
Half of respondents believe compulsion is the most effective method of hauling in the savings gap while 20% believe in ‘increased tax incentives.’
Two in ten advisers believe ‘consumer confidence in the pension industry’ will have most impact in the government's quest to cut the pension savings deficit.p>This is revealed at the same time as research from an actuarial firm which finds the UK pension deficit of FTSE 100 companies for July still stands at £37bn.
A report published yesterday by Lane Clark & Peacock, says this figure is despite an increase in contributions by three-quarters of FTSE 100 firms and the recovery of equity markets which helped to cut the deficit by £5bn over the past year.
That said, LCP says the UK's blue chip index would still need to climb a further 1,300 points to above 6,700 points if it is to to erase the combined FRS17 deficit within the next year.
At current contribution levels, it would take eight years for the aggregate FRS17 pension deficit to be erased, the actuarial firm argues.
It says new regulations will affect firms with pension scheme deficits, adding for companies planning to return funds to shareholders, buy, sell, merge or undergo refinancing will need to place a close eye on its deficit levels.
Partner at LCP, Chris Tavener says: "Despite record amounts of contributions by the FTSE 100 companies and a recovering equity markets, FRS17 pension deficits remain frustratingly high. New funding regulations will mean pressure for higher contributions will continue, which could lead to increasing conflict between trustees and the sponsoring company.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Gareth Vorster on 020 7968 4554 or email [email protected].IFAonline
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