Pensions nightmare coming true

THE pensions crisis threatening millions of Britons has begun to bite, according to alarming Government figures. For the first time in more than 20 years the number of workers retiring with their own pension is dropping, they show.

The figure peaked at more than two-thirds of the pensioner population in 1997. Since then the numbers leaving work with occupational schemes have dipped below 60%, according to statistics from the Department of Work and Pensions.

This is a stark reverse in the trend running from the 1970s which saw most older people enjoying higher and higher standards of living because of the impact of good occupational pensions in the decades after the Second World War.

Fewer of the generation now coming into retirement have occupational pensions, a problem exacerbated by the collapse of traditional heavy industries in the 1970s and early 1980s. The smaller firms in the service sector that replaced the heavy industry were less likely to offer occupational pensions. Many workers opted for private-sector pensions that often proved inadequate.

In northern industrial districts several hundred thousand men who once worked in mining, steel or other such industries have been living for almost 20 years on unemployment and disability benefits. Many are now reaching retirement without the occupational pensions on which they would once have expected to rely.

Millions who do still enjoy occupational pensions are likely to see their value plunge because of lower stock market returns, the £5bn tax grab on pension funds by Chancellor Gordon Brown, and harsh new accounting rules. The effect has been that many companies, among them some of the most famous names in industry, are abandoning guaranteed final-salary pensions and replacing them with riskier stock market-based pensions that have lower returns.

The new figures brought fierce criticism of Brown's handling of pensions from the Tories. Tory work and pensions spokesman David Willetts said: 'The trend used to be for more and more pensioners to retire with an income from an occupational pension. These latest figures are very worrying because they show that trend is being reversed.

'Only 59% of recently retired pensioners now have an income from an occupational pension against 67% when Labour came to office.' He added: ' This is hard evidence of just how serious are the problems affecting our pensioners. Millions of people are worried about their pension and the Government is doing nothing about it.'

The drop in numbers with their own pensions means that many are facing a retirement reliant on the State pension and means-tested benefits.