In an environment of low interest rates, high inflation and little economic growth, it is no surprise that people are struggling to make ends meet.

According to the latest research from the Joseph Rowntree Foundation, there were 13 million people living in poverty in the UK at the end of 2009. Of these, 5.8 million people were in ‘deep poverty’, marking the highest proportion on record.
This, in itself, has absolutely nothing to do with pensions or saving for retirement, but the interesting fact is that, while these people struggle to survive, the gap between a corporate elite and the average UK adult is yawning ever wider.
Deborah Hargreaves, chairman of the High Pay Commission, notes that if current trends continue, by 2025 the top 0.1 per cent of earners will take home 10 per cent of national income, and by 2030 Britain will have sunk back to levels of inequality not seen since Victorian times.
Grossly unequal
A High Pay Commission survey of 2,000 adults found that seven out of ten believed that high pay made Britain ‘grossly unequal’, and a similar number had no faith that anything could be done by either the government or business. 
The commission, which is studying boardroom pay, said average wages were ‘stagnating’, except for company bosses, with chief executives now paid up to 145 times the average wage. 
Of course, what makes the matter worse is that many of these highly paid executives have a very attractive pension to accompany their very attractive salary. For the rest of the UK population, the (very) old message of start saving early has never been as important. The question now, apparently, is whether to skip a generation to make the most of the savings. 
According to the latest research from Alliance Trust Savings, more than a third of today’s children will retire with 
a pension pot worth £1.75 million as a direct result of parents maximising pension contributions, assuming an annual growth rate of six per cent.
The SIPP provider states that more than a third (34 per cent) of their child SIPPs received the maximum gross contribution of £3,600 in the tax year 2010/11. 
By paying the maximum gross contribution of £3,600 into a child’s SIPP each year from birth to the age of 18, a child’s pension could be worth £1.75 million by age 65. And, if the child continues to make contributions during their adult life then their pension fund could be worth significantly more at retirement.
Bursting out of the blocks
In fact, further analysis shows that those children that are aged ten and whose parents have contributed the full amount into a pension product will already have pensions worth three times as much as those built up by the average worker during an entire career.
Insurers say that the value of the average pension pot used to buy an annuity at retirement is today less than £25,000. For a 65-year-old man, this would provide around £1,100 a year.
As it stands, the next generation of pensioners will not have enough money saved to survive during their retirement. So, perhaps lending a helping hand to the future elderly generation could lift the UK out of the poverty trap for which it is currently headed.
Jenny Lowe is a journalist with the Financial Times Group