Leaked figures show £57 billion pension gap
Britons are saving £57 billion too little for their retirement, according to figures leaked to a Sunday paper.
The Sunday Times revealed the shortfall after obtaining figures from a Government-ordered review of pensions that is due to report on Tuesday next week. The paper claims that the gap identified by the Pensions Commission is near double that expected previously.
The Commission, which is headed by former CBI chairman Adair Turner, is expected to outline three options to plug the gap: higher taxes, later retirement or measures to make people save more.
Writing ahead of the official publication of the review, Work and Pensions Secretary Alan Johnson has called for an end to “the head in the sand culture” on Britain’s pensions gap.
“We estimate that between eight and 13 million people are either under-saving or might want to save more. Half the population do not even work up to state pension age”, Mr Johnson writes in today’s Observer.
Rejecting demands for pension saving to be made compulsory, Mr Johnson stresses the importance of “revitalising” the voluntary approach to saving, whilst encouraging more people to retire later.
Whilst the Government says the pensions gap is caused by a mix of undersaving and early retirement the Conservative Party has seized on the leaked figures as evidence that Chancellor Gordon Brown has removed the incentive to save by cutting pensions tax breaks.
Blaming the pensions gap on the decision made by the Chancellor in his first budget, Shadow Pensions Secretary David Willetts said:
“Gordon Brown’s first action was his £5bn annual tax on pension funds and the Government has consistently underestimated the amount we are setting aside.”
“This leak confirms what we have been saying for a long time – we are not saving enough.”
