Is your good health going to cause a pension crisis?

According to analysis by the Government Actuary's Department taxes must rise or State pension benefits must be cut soon, regardless of who wins the next election.

The reason for this is that more and more people are living longer and longer lives. According to the GAD by 2010, when the baby boomer generation will reach retirement age, approximately 27% of the adult population will be in retirement. Alarmingly this figure is predicted to rise to over 45% by 2050 unless something is done.

What does this mean for you?

All of this makes things much, much harder for the state to provide any kind of pension in your retirement. When they should have been cutting back on spending to allow for the increasing pensions burden they have instead been increasing public spending.

All of this points to the drastic need to raise taxes still further or cut public spending on things such as health and education, neither of which will be popular with the voter.

If anything this stark situation makes relying on the state pension in your old age a particularly perilous position to put yourself in. Thankfully there are many steps you can take to ensure yourself a nest egg when the time comes to retire.

What can you do?

The simplest solution is to join your company or occupational pensions where they are available. Failure to do so often amounts to the same thing as volunteering for a pay cut.

Another strategy would be to take your savings into your own hands by utilising the savings mechanisms available on the market.

The Bradford & Bingley mini cash ISA offers you a tax free return of 5% per year, with interest available monthly or yearly. Whilst we wouldn't recommend this as your prime retirement fund it helps to provide an invaluable nest egg to protect you from unforeseen circumstances.

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