Find £17,000 to secure a pension

THE vast scale of the pension crisis facing millions of British workers is revealed today. A major City report warns that every worker in Britain will have to find almost £17,000 extra in the next 10 years - or face either poverty in retirement or working until they drop.

In total, more than than £500bn is needed to plug the pensions black hole by 2013, according to the report from UBS Global Asset Management.

But vital savings for old age are not being made because of the 'cowboy' image of the pensions and savings industry.

The report paints a bleak picture of the retirement prospects of people currently in work, revealing that:

People will have to work for much longer than they hoped to avoid old age blighted by poverty.

They will have to save far more of their earnings to provide enough income to live on when they retire.

Many will be dependent on State handouts for more than 40% of their income after they finish work.

The report warns: 'The trend towards early retirement has ended abruptly and the focus is firmly on later retirement and the need for individuals to save more.

'As eligibility for State benefits becomes more limited, and private sector early retirement terms less affordable, more people will carry on working and accumulating assets for longer and delay retirement.'

It predicts that the national pension 'pot' will need to grow by more than 60% from the current £950bn to more than £1.5 trillion by 2013.

However, it says that the required investment is being held back by lack of trust in the investment industry - following a succession of disasters such as the near-collapse of Equitable Life and pensions mis-selling.

Mike Housden, one of the authors of the UBS report, said: 'Many people won't save the maximum due to security worries. Even household names have been tarnished. Many commentators say people would rather go into a buy-to-let property before a pension.'

The biggest growth is projected to be in personal pensions following the bad publicity generated by company schemes in recent years.

The amount invested in personal and stakeholder pensions will more than double from £250bn to £540bn, the report says.

It follows a warning from Conservative pensions spokesman David Willetts that the shortfall in retirement funding was a crisis 'as serious as terrorism or global warming'.

A separate report from market research company Mintel finds that the savings industry is struggling to make an impact in 'a culture of immediate gratification'.

In a survey of 2,000 adults it found a third of those not contributing to a pension could not afford to. But almost as many simply said their retirement was too far away, or that they could not be bothered to think about it.

About7% said they were not making provision because they found the subject too confusing, and 6% said it was because they did not trust pension companies.

The Mintel report found Londoners were among the worst providers for their old age. Only 41% had provision other than their State pension, compared with 52% in the south of England outside London.

The golden age?

THE crisis gripping Britain is a direct result of two of the greatest achievements of our age. One is the dramatic and largely unforeseen rise in life expectancy caused by better diet, less smoking and improved health care.

In 1971 a man of 50 could be expected to live 23 more years, a woman 28.3 more years. By 2010, these figures will be 30 years for men and 33 for women.

Retirement, once a brief interlude between company clock and wooden box, is now for most people a major part of their life span - but we need to save more while in work to pay for it. That is not a habit that comes easily to the credit-card generation.

The second achievement is the defeat of inflation and the era of low interest rates. While welcome for the economy as a whole, it means returns from savings are lower than for more than 50 years. At the same time, the value of our pension pots is up to 40% lower due to the stock market collapse since 2000.

We must now save up to £200,000 for a retirement income of £10,000. For many, the sacrifices involved mean it is just not worth the effort.