Retirees may have to rely more heavily on savings

People will have to make more of a reliance on their savings after they retire, a financial expert has suggested.

According to Churchouse Financial Planning Limited, smaller state pensions will force people to dip into their personal savings, should they be fortunate enough to have any.

Director Keith Churchouse suggested that there will be some people who will decide not to make contributions to their pension fund through the personal accounts system that is to be introduced in 2012.

However, he went on to say that how many people choose to opt out will depend on the economic situation in four year''s time.

He explained: "I do think that people are very unlikely to be reliant on pensions in retirement. They are likely to be reliant on savings, had they taken the opportunity to accumulate any.

"There is reluctance among many people to pay into pensions, and there has been for a number of years. With personal accounts, you can still opt out of them, and I am sure there will be people who will still opt out of them, and in doing so they will still be reliant on the state when they get to retirement.

"However, I don''t know whether the government has the view that if you actively opt out of the scheme, there is going to be a caveat to say that you can''t pop back to the state later."