Pension pots plummet thanks to low rates

10/12/2009

A number of pension savers could be pushed into debt problems'>debt problems as low interest rates cause funds to lose value.

Recent research from Life and Pensions Moneyfacts found that pension annuity rates are currently at an all time low.

On top of this, high charges are taking more and more of the little change that pensioners are currently able to get out of their funds.

Indeed, accounts intended to protect pensioners from drops in the stock market are offering relatively little return at present – and some are even costing customers.

The Daily Mail reports that insurer Standard Life warned savers in its Pension Managed Cash fund that they are actually losing money.

This, they say, is because the one per cent annual charge on the account is actually greater than the money earned from it.

Kevin Still, director of debt management firm EuroDebt, is concerned that many people of pensionable age still have sizeable levels of unsecured debts and an outstanding mortgage when their income is reducing.

He said that the company's "average over-60 client on a Debt Management Plan'>Debt Management Plan has over £29,000 of unsecured debts with eight creditors.
As such, EuroDebt feels that there will be a growing requirement for professional debt advice.

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