Currencies

Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Financial

Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Property

Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Banks

RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

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Categorized | Insurance

Pension savers too optimistic on income


Posted on November 30, 2012

Many people saving for defined contribution pensions have no idea what their income will be after they retire or ever consider this in light of how long they might live. Those who do are bound to underestimate their life exp­ectancy by a wide margin, a study published on Friday shows.

The research, by the Institute for Fiscal Studies and funded in part by the Nat­ional Association of Pension Funds, underscores the challenges facing policy makers as the country shifts from defined benefit pensions, where employers provide income in retirement, to the defined contribution system, where employers help staff save to buy an income stream, or annuity, from an insurer.

    In the latter system, retirement income depends on the amount paid in and how well the assets in the scheme perform, rather than on years of service and earnings, as is the case with defined benefit pensions.

    The defined contribution sys­tem is on the rise as defined benefits have bec­ome far less common and more individuals save money in an investment pot to buy an annuity.

    “Defined contribution pensions require people to make complex decisions, both while they are accumulating their pension savings and when they want to start drawing an income,” said Gemma Tetlow, a programme director at the IFS and co-author of the report. “Understanding how people have been coping with … decisions over the last decade is important as policy makers consider and implement further reforms to this market.”

    The study found that a third of those close to retirement age had no idea what their pension would be, but for those saving through a defined contribution scheme the proportion was considerably higher, at 40 per cent. It also found that those aged 50 to 64 with defined contribution savings pots are too optimistic.

    On average, their pension pot would have to grow 77 per cent, or £20,200, to match their expectations.

    Joanne Segars, NAPF’s chief executive, said: “The average saver with a defined contribution pension is being over-optimistic.”