Contracting pensions to private sector is poor deal says Which? |
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Mon, 22 Aug 2005 09:05
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LONDON - The consumer organization Which? has said that more than 4.5 million people have lost thousands of pounds by moving their pension accounts from the government to the private sector.
The state second pension formerly called as Serps was more lucrative for around 70 percent of the people who had moved to the private sector, the consumer campaigning group said. These people would now receive only 80 percent of what they would have received had they struck around with the government scheme. This survey comes close on the heels of an article in Cash, which had revealed that there were some problems in contracting out. Norwich Union and HSBC have already moved their pension policyholders back into the S2P fold over the past two years.
Which? also said that the government was guilty of a "huge abdication of responsibility." The organization also called on pensions minister Stephen Timms to respond and clarify the issue. The magazine said that only one person out of 22 aged over 50 would be able to get a better deal by contraction his/her pension policy to the private sector.
Malcolm Coles, editor of Which? magazine hit out at the government for what he said was a monumental blunder, "The Government's saved money, and pension companies have earned billions. The only losers are people who did as they were advised. Given the government's stated concern over the so-called pensions' saving gap, it's high time it gave us some clear direction on opting out, before millions lose out," he said. Mr. Coles himself has lost out around £800 a year from contracting out, "Contracting out has been one of the worst financial decisions I've ever made," he admitted.
The Department for Work and Pensions responded by saying that "ultimately it is up to individuals themselves to decide what sort of provision is best for them."
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