People unaware of pension risks linked to stock market
Saturday, 11 Oct 2008 14:31
People's pensions could be invested in high risk areas
The Pensions Advisory Service (TPAS) has warned that too many people could be unaware of the risk involved with their current pension scheme.
TPAS – an independent voluntary organisation grant-aided by the Department for Work and Pensions – claims that around five million pensions in the UK are in 'defined contribution' pensions which are linked to the stock exchange.
Although many of those funds spread the risk; between stocks, property and cash, TPAS claims that too often people sign up to the default fund which can be anywhere between 75 and 100 per cent based on the stock market.
With the financial markets currently in decline TPAS says people need to be made more aware of the risks involved with such schemes.
Malcolm McLean, of TPAS, told BBC Radio 5 Live: "My concern is people think the default fund has been recommended to them and that it's appropriate for them personally, which it may not be, because it may be 100 per cent invested in shares.
"But they may actually be taking more risk than they know about and are comfortable with."
However, the National Association of Pension Funds has tried to reassure pension investors that default funds should move money away from the stock market when people get closer to retirement age to add extra security.