This week marked the "first anniversary of the credit crunch", according to report agency Callcredit, which says 46% of the adult population cite "staying afloat" as their main financial concern over the next 12 months.
This week marked the "first anniversary of the credit crunch", according to report agency Callcredit, which says 46% of the adult population cite "staying afloat" as their main financial concern over the next 12 months.
However, at a time when pensioners' budgets are under more pressure than before, still only one person in three is shopping around for the highest retirement income when converting their pension fund into an annuity.
The Financial Services Authority revealed last week that almost 40% of insurers are still failing to notify their customers properly that they can choose the "open market option", preferring to befuddle them into keeping their money in-house whatever the rate.
Standard Life's pensions policy head, John Lawson, reveals that for large numbers of people buying an annuity there is actually no option to shop around - because the funds are too small.
Half of all pension policyholders who convert to an annuity with Standard have a fund worth less than £10,000, for 28% it is less than £5000 and only Legal & General offers an open market option for that size of fund.
Only six, including Standard, offer a price for a £5000 to £10,000 fund.
For those with no other pension funds, it is currently possible to take funds of up to £15,000 as a lump sum, and the Conservatives are proposing to increase that limit.
But as our leading insurers underlined (in The Herald) this week, the issue of small pension funds is a hidden political minefield. When, in four years, every employee is enrolled automatically into a personal pension account, large numbers of the low-paid risk building up a small pension fund that will impact adversely on their means-tested benefits in retirement.
At worst, they could lose £1 of benefits for every £1 of pension income saved for.
Taking it as a lump sum could also affect benefits.
There would be only one sure way to keep the full value of all your savings on retirement: spend them.
The Pensions Policy Institute (PPI) has proposed that this flagship of government pension policy be rescued by a promise to disregard the first £12 of income when assessing for benefits - that equates to a £10,000 pension fund.
Lawson says the PPI's solution would empower "those most at risk of not benefiting from saving - principally those who rent their home in retirement and older personal account savers with no existing pension savings".
But rather than incorporate it into the Pensions Bill, the pensions minister Mike O'Brien has dismissed it. The cost, he said, would be "enormous at more than £600m".
Lawson comments: "Is £600m really an enormous amount in the context of government finances?
"If the media is (rightly) sending messages to older people and those renting their home that it won't pay to save in personal accounts, then it is likely that a large number of other savers will be discouraged from saving also."
Lawson concludes: "The issues around means-testing and whether it pays to save risk de-railing the political consensus that had previously existed around the introduction of personal accounts.
"Making such a small concession would give the government back the moral high ground - as it stands, they are in danger of repeating the stubborn mistake they made over funding for the Financial Assistance Scheme."
