Stephen Peters: 'I don't want to have to rely on what the state offers'
The value of private pension savings of 3.7 million people in the UK has been severely damaged by the credit crunch and the recession, figures show.
Pension consultant Aon calculates that since the beginning of October 2007, defined contribution (DC) savings pots have shrunk by 29%.
Aon says the combined pension pots have shrunk by £161bn, from £552bn to £391bn over the 17-month period.
The fall is largely due to the dramatic collapse in share prices.
Aon's research for the BBC Ten O'Clock News covers both individual private pension plans, company DC schemes, and additional voluntary contributions (AVCs) made by members of final-salary schemes.
"People have been putting money into schemes in those 17 months, so the underlying investment performance of most savers was worse than a fall of 29%," said the BBC's business editor Robert Peston.
This is a worrying trend as people are living longer and spending many more years in retirement. Many won't be living on an adequate income
Malcolm McLean, Pensions Advisory Service
"Even so, that's a pretty horrible erosion in the value of millions of savers' pensions."
Final-salary schemes of the top 200 companies in the private sector saw a surplus of £1.4bn in October 2007 turn into a deficit of £19.4bn.
Joanne Segars from the National Association of Pension Funds admitted that "confidence in pensions is low at the moment."
But she maintained that it was slowly returning and that pensions were still the best way to save for retirement.
Malcolm McLean, chief executive of the Pensions Advisory Service, described the figures as "very disappointing but not entirely surprising".
He also pointed out that new contributions would have suffered, and would continue to suffer, during the recession.
"People are backing away from pensions as they struggle to live from day to day. Many people are not planning for the future, but you can see why.
"This is a worrying trend as people are living longer and spending many more years in retirement. Many won't be living on an adequate income," he added.
The rapidly widening deficits of final-salary schemes are well known and are measured by the Pension Protection Fund (PPF) each month.
Its most recent estimate put the combined deficit of nearly 7,800 final-salary schemes in the private sector at £219bn in February, with 91% of schemes now in deficit.
"The picture that emerges is of growing financial strain on private-sector companies that offer final salary pension schemes and of hideous losses for 3.7m savers in direct contribution pension schemes," said our correspondent.
However, he did point out that because stock markets have fallen so far and companies are better value as a result, now may in fact be a good time to invest in a pension.
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