14-Million British Private Sector Workers Face Bleak Old Age as Pension Contributions Fall

Millions of British private sector workers face a very bleak old age, according to a pension review by The Workplace Retirement Income Commission (WRIC).

WRIC indicates that 14 million people are not putting their savings into pension scheme at all. Even workers who are involved in a pension plan are often overcharged for services that are inefficient and complicated.

Lord McFall, the former Labor chairman of the House of Commons' Treasury Committee, was asked to investigate the state of the pension sector by the National Association of Pension Funds (NAPF).

The report stated that last year, only 36 percent of private workers between the ages of 16 and 64 actively contributed into a private pension.

Moreover, over the past decade, the percentage of men saving into a pension declined from 49 percent to 38 percent, while for women it fell from 36 percent to 33 percent.

"Too many people are stuck in a complex, costly and inefficient system that relegates the consumer's interest to second place. On top of that, they simply are not saving enough to secure a decent retirement," said Lord McFall.

"People need to get more bang for their buck or they are not going to bother with a pension. Instead, they will end up spending today, ignoring tomorrow and scraping by in poverty on the state pension. The complacency of many in the pensions industry is alarming."

McFall’s report recommended that the government should raise the minimum amount contributed by workers, among other measures.

Pensions Minister Steve Webb said the report provided a "a very serious warning and a wake-up call” and added that unless people begin saving for retirement now, they will face "a pretty meager existence" in the future.

The Age UK Charity welcomed the report.

"Government action is critical now to ensure those with small pension pots do not lose out any longer," said charity Director Michelle Mitchell.

The Department for Work and Pensions (DWP) also welcomed the report’s findings.

"We have already taken significant steps to reforming the system," said a spokesman for DWP, according to BBC.

"We are consulting on simplifying the state pension to provide a clear foundation for saving, and people will start to be automatically enroled into a workplace pension from Oct. 2012, helping millions to save for the first time. We are working closely with the pensions industry on many of the issues raised in the report."

Neil Carberry, Director for Employment Affairs at CBI, a top UK business lobbying organization, told the media: “This report rightly identifies the need to do more to boost savings for retirement, and makes some helpful recommendations about how to build a culture of saving in the UK.”