Pensions: We all just a bunch (or should that be flock?) of ostriches

26th May 2011

The Daily Telegraph reports that members of the so-called ‘Ostrich Generation' know they will live longer than previous generations and understand that traditional state and company pensions will no longer be so generous.

However, they are doing nothing to tackle this issue as the majority are not making any plans about how they'll fund their retirement, finds the HSBC report, The Future of Retirement: The power of planning.

Joanne Segars, chief executive of the National Association of Pension Funds, said in the Daily Telegraph: "Far too many people are trapped in the headlights when it comes to their own retirement. They know they'll need money in their older age, but they're doing nothing to prepare for it."

Some 39% of people in the UK have a financial plan to save for their retirement – far fewer than people in Malaysia and China, the report suggests. The HSBC survey, which quizzed 17,000 people in 17 countries, concluded that up to 84% of people in Malaysia were making provision for retirement. The survey by HSBC found that people who were planning for their retirement had saved an average of £123,000 for retirement.

Nearly one in five don't know what their main source of retirement income will be, with a further 21% saying they will rely on the state pension. As a whole, 68% of respondents are worried about coping financially and 48% fear they are not saving enough for their retirement, rising to 57% among women in their 30s and 40s. Half of those asked in the UK thought they would be worse off in their old age than their parents.

But despite all this, slightly fewer than four in ten Britons have put a financial plan in place to provide for their futures and 68% are worried they are not financially prepared.

Tom McPhail at Hargreaves Lansdown, said that the report reiterates previous findings from elsewhere, that the UK is worryingly underprepared for retirement.

He says: "The most important factor in pension planning is how much you pay in; if you don't pay enough into your pension then there isn't much you can do to bridge the gap. The next most important factor is how long you save for. For example, if you start a pension at age 22 instead of 25, you'll end up with over 20% more in your retirement pot, whereas if you leave it until you are 35, you'll end up with nearly 50% less.

"The most significant step to resolve this problem will be the government's auto-enrolment plan, which will mean that by 2016 the vast majority of employees will be members of a pension," said McPhail in the Daily Telegraph.

Stephenmarchant says: "I am in my fifties and realise how difficult it is to plan for retirement when we are in the middle of a fundamental shift in global economic power. With the BoE and Govt destroying savings and pension pots by holding returns below the real rate of inflation why would you want to trap your wealth in fiat backed currency."

The National Association of Pension Funds said: "We must begin to think differently about the way we approach financial planning for retirement.

"The report suggests that Britons currently have a culture of dependency on the state, which is a false economy. People have to take greater personal responsibility for their retirement and rely less on the state, by planning more effectively and saving more for themselves."

In his blog Game Theory Strategies, Barry Hughes claims the breakdown of the family unit had removed the incentive to save for a pension.

He said in Malaysia, one of the countries cited in the HSBC report, there was no state pension provision but there were stronger family ties.

"Children are expected to look after their parents. This means that the risk to leaders of unrest and losing power is tiny so it does not affect their decision-making. They can safely have no state pension and therefore there is a much stronger incentive to save. This results in the much higher savings rates."

Much is made in the UK of trying to get people to save for their retirement but the problem is deeply rooted in the breakdown of the family unit which means there is no alternative support for the elderly apart from the state. In fact, we have the opposite situation where parents who are at or near to retirement are still having to support their children who are well into their 30s."


For more information on pensions, go to and for more information on the National Employment Savings Trust go to this site. You can apply for a state pension forecast here.

To receive our free weekly email sign up here.  

Leave a Reply

Your email address will not be published. Required fields are marked *