Lack of interest in pension plans

CONTINUED weakness in the markets has led to a massive drop in those interested in taking up a pension.

This time last year 73% of those surveyed by Standard Life said it was a good time to invest in a pension plan, but this number has now slumped to 40%.

The survey also showed that people are paying an average of 5.9% of their salaries into their pension despite most thinking 12.1% would be an adequate contribution.

Head of pensions at Standard Life, Jim Connolly, said: “This is a huge drop in such a short period of time and no doubt reflective of the current weakness in investment markets.

“However, we would strongly caution that current weakness in investment markets should not deter people from investing in pensions.”

Mr Connolly said that people have a choice of a range of investment options within pension contracts, from low risk options such as fixed term deposit accounts to property, funds and shares.

“Even the most risk averse should not sit on the fence if they can afford to put some money away in a pension,” he said.

Standard Life said the benefit of a 41% tax relief for higher rate taxpayers is the same as the Government giving a bonus of 69 for every 100 net contribution invested into a pension plan.

“Even if your pension contributions were to sit on deposit for the next 12 months it would be hard to beat that for an after tax return,” said Mr Connolly.

“When you consider that SSIAs were so popular and gave customers a top up of 25 for every 100 saved.

“However, pensions don’t appear to have the same appeal as SSIAs, despite the more generous Government incentive,” Mr Connolly added.