Worth Investing in a Pension - Dissertation Example

It also ensures that the individuals have sufficient funds apart from the State related benefits to maintain a very decent lifestyle. (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 Trend also suggests 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 a large number of people every year. (Bonoli & Shinkawa, 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 the 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 assumption 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 a sharp decline in the standards of living, therefore, requires that the people must consider investing in the Pensions from the days when they are earning higher amounts every year. (Cohen, 1981).