Brewin Dolphin launches UK’s first calculator to gauge impact of Britain’s Pensions Timebomb

Brewin Dolphin, one of the largest private client portfolio managers and pension advisers in the UK, today launches the UK’s first pension calculator at http://www.pensionstimebomb.com/ enabling individuals to calculate the impact on their pensions of the removal of the tax credit on dividend income introduced in the 1997 Budget.

Brewin Dolphin realised that many savers in pension schemes were oblivious to the impact of the removal of the tax credit on their own savings and therefore have developed this ‘Pensions Timebomb’ tool kit.  This enables individuals to calculate their pension shortfall and help understand their options for making up the difference to their eventual pension pots.

The calculator reveals some alarming figures.  For example it suggests that a saver in their mid 40s may have to work and save for an extra 20 months or increase their investment by around 28 per cent from today until they retire. The calculator does not claim to give an accurate valuation of investors’ pension pots but an approximation of the scale of the problem and these are significant numbers. The sooner investors are aware and take advice, the better chance they will have to fill the hole.

“Britain is effectively sitting on a pension’s timebomb – an ageing population with diminishing financial security in retirement.  The long term costs the country will bear as a result of Britain’s pension deficit will dwarf the estimated £5 billion¹ a year raised by abolishing the dividend tax credit in 1997.  Brewin Dolphin has been calling for the restoration of the tax credit for a long time and now urges all the political parties to set out their long term proposals to address the pensions crisis.” said Jamie Matheson, Brewin Dolphin’s Executive Chairman.

Charlotte Black Head of Corporate Affairs at Brewin Dolphin said “At the end of last year nine out 10 final salary pension schemes had been wound up² and savers in the private sector have been increasingly switching into money purchase pension schemes.  We are anxious to raise awareness among investors and to encourage them to challenge MPs and candidates from all parties during the General Election, to set out clearly what their policies will be to tackle Britain’s Pension Timebomb and then to stick to the policy throughout the next Parliament – to give us some certainty and confidence about the advice we give to investors. “

Richard Harwood, Divisional Director of Pensions at Brewin Dolphin said “The pension shortfall that millions are now suffering highlights the need for long term political consensus.  As things stand, advisers can make recommendations about how best to address any shortfall through, contributions and underlying investments.  But it is vital that the tax treatment is made more attractive if individuals are to be encouraged to properly address under provision. At the moment we find ourselves in the extraordinary position of advising some clients not to invest any more in their pension fund at all.”

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¹ Geoffrey Robinson – The Unconventional Minister 2000 and Hansard HC Deb 08 May 2003
² Association of Consulting Actuaries January 2010

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