Tuesday, November 19, 2019

Is it worth investing in a pension (UK context) Dissertation

Is it worth investing in a pension (UK context) - Dissertation Example (Nader, 1991). As such, the overall importance of investing into pensions is critical from the point of view of maintaining a certain level of life style. It also ensures that the individuals have the sufficient funds apart from the State related benefits to maintain a very decent life style. (Lluberas, 2007). This is also evident from the fact that the overall pension funding gap is increasing rapidly every year and individuals require up to ?10,000 every year to fill that pension gap and the overall gap will be over ?300 billion per year.1 Trends also suggest that as the population ages, the overall ratio of people working to support the State Pension will decrease from 3.32 in 2001 to 2.44 in 2060. This decline in the overall number suggests that more and more people will be on the State Pension and as such the overall benefits may continue to decline due to the increasing pressure on the government to pay off State Pension to such large number of people every year. (Bonoli & Shin kawa, 2005) It is however, important to note that the different studies have suggested that the pension funds in which individuals invest for their pensions may not be performing well. Though most of the pension funds in UK achieved positive returns in 2010 however, considering the long term nature of such investments, it may be relatively arbitrary to conclude that the pension funds can provide sufficient and desired returns to ensure that the investors (individuals) will have sufficient pensions to live a comfortable retirement life. (Blake,2000) The choice of this topic has been mostly based on the assumptions that as the number of people grow and rely more on the State Pension, their overall standards of living may decline sharply when they are in the retirement age. Such sharp decline in the standards of living therefore requires that the people must consider investing into the Pensions from the days when they are earning higher amounts every year. (Cohen, 1981). A gradual cont ribution of the certain sum of money every year can help individuals to become more self sufficient in their retirement age. However, given the fact that the overall performance of the pension funds has not been up to the mark in recent times, a natural question arises as to whether it is rational to invest into pension funds? Could they provide the desired returns to the individuals when they are in retirement so that they can live a more comfortable life? Considering the above situation, the logical question also arises as to whether it is good to invest into pension funds? Can pension funds provide the desired level of returns over the period of time to ensure that they meet the objectives of the pension holders? The basic aim of this paper therefore is to explore and analyze the question of whether it is good to invest in pensions with special reference to UK market. This research project will also attempt to explore the question of whether the tax saving benefits can help the p ension industry, are there any factors which provide the incentive to save for the pensions considering the factors such as job mobility, with the stretching of the pension age by the government, what effect this could have on the overall planning for the retirement life of the

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