Keep investing in pensions schemes say PwC
PwC are encouraging people to save for retirement despite the recent economic downturn, or face an impoverished old age.
Many pensions have been badly hit by the recent fall in stock markets, with many defined contribution schemes worth no more than the cash contributions to them over the past five years. Larger corporate pensions schemes are also facing bigger deficits under the current business uncertainty.
Richard Podd, director at PwC North East is encouraging individuals to exercise care and caution when dealing with pensions, and to not be dissuaded from saving for the future by the difficult economic climate.
Richard Podd, director at PwC North East said: “The problem is not with pensions but ensuring people get the right balance of investments so that they do what they’re supposed to do, plan over the longer term and are not overly alarmed by market volatility.
“Employers, trustees and pension providers have a vital governance and communications role to play here, and it is important that charges are kept to a minimum at a time when they will be felt acutely.”
The recent fall in stock market is particularly concerning for people approaching retirement, and many people will be forced to defer retirement until the markets recover. However, this will provide a good opportunity for individuals with much of their working life ahead to question whether this is the best time to make extra pension contributions.
Richard is now calling for the Pensions Regulator to help corporate pensions schemes by providing some leeway on the timeframe for addressing shortfalls, to give employers time to adapt to the changing conditions.
Richard added: “What firms should be doing is talking to trustees to ensure they understand the extent to business is affected by current conditions and not to make assumptions.
“Ultimately market fluctuations reinforce the importance of getting actuarial calculations right and ensuring the methodology reflects the long term investment strategy.”