Defined contribution savers 'must wake up to longevity rise'

Members of defined contribution pension schemes need to ensure they are aware of the consequences of increased longevity if they are to make effective retirement plans.

That is according to BlackRock, a defined contributions (DC) provider, which told its members that they may live longer than they previously expected, urging them to consider how much they need to save to enjoy a longer period of retirement.

The company explained that annuity providers were cutting their rates to account for longer lifespans, but that many individuals had not considered how inflation would eat away at the value of a fixed pension.

Speaking to website Professional Pensions, Steve Rumbles, head of DC at BlackRock, said: "The problem we have at the moment is that people are just not aware of the issue. The solution is for members to think ahead about what they will need in retirement - day-to-day living costs, desirables and luxuries - and work back from there."

Meanwhile, the National Association of Pension Funds (NAPF) has launched a new investment competition in order to identify the best pension fund investments for DC and defined benefit (DB) schemes. The winning schemes will be given £7,500 to fund courses and educate trustees.

'Hopeful generation' faces £482 billion shortfall

A new study involving 8,500 youngsters aged 11-19 years has revealed that a new "hopeful generation" is emerging with high financial expectations for the future, despite the current state of the economy.

According to a survey commissioned by NatWest, this gap between expectations and probable reality total a £68,983 per person, a staggering £483 billion across the whole of the UK.

The survey revealed that 4.1 million (59 per cent) youngsters expect they will own a house by the time they are 25, despite the fact that the average age of a first time buyer is 28 years old.

Nearly half (43 per cent) believed that they would come out of university with less than £10,000 in debt despite top-up fees leaving students with an average debt of £12,363, while 31 per cent optimistically believed that they will probably never fall into debt.

On average, young people aged between 11 and 19 expected to be earning £31,190 by the time they were 25. Currently, 22-29 year olds earn an average annual salary of just £17,817 in the UK.

While the hopeful generation dreams of its future prosperity, today (March 10th) marked Debt Freedom Day, the day that the average UK worker has earned enough to service their debts.

According to research from Unbiased.co.uk, the average Briton works 70 days a year just to clear interest on credit cards and loan debts.