1 in 5 have no pension savings says report

Almost one in five (17%) of Britons only have the State Pension to rely on for income in retirement, according to a new report. Close to a third (28%) of 65 to 75-year-olds surveyed by St James’s Place are solely relying on the State Pension, with 19% of 55 to 64-year-olds also having no pension savings. The impact of auto-enrolment means only 7% of those under the age of 35 are relying on the State Pension alone to fund their retirement. Many of those surveyed were also not engaging with their pension. One in three (32%) said they do not know what pension savings they have, and 23% said putting money aside each month for their pension is not a priority. The research highlighted the importance of Financial Planning, with over half (56%) of those with a financial plan feeling secure about their finances in retirement compared to a third (33%) of those without one in place. Those saving beyond the State Pension estimated their total pension wealth to be £50,923 on average, according to the Financial Health Report. Nearly half (48%) said they have less than £50,000 in pension savings, and 61% said they have below £100,000. For those between the ages of 65 and 74, current total retirement savings across workplace and individual pension plans was an average of £76,151. This figure rises to £89,349 for those between 55 and 64 years old. According to the Pensions and Lifetime Savings Association, savers need a retirement fund of £500,000 in total to ensure financial security for a moderate standard of living in retirement. This leaves the average Briton approaching retirement with an over £400,000 shortfall. Britons appear to be aware of this shortfall. Two thirds (60%) of those surveyed said they do not expect to have £500,000 saved up by the time they retire. Just 15% of those between 45 and 64 years old said they are confident they will have this sum saved by the time they retire. Younger savers were more confident with 40% of 25 to 34 year olds feeling confident they will have £500,000 in pension savings by the time they retire. However, many Britons were severely underestimating how much they need to have saved in a pension to ensure a reasonable standard of living in retirement. One in five (23%) said they believe they need less than £50,000 in their retirement pot to live moderately well in retirement, with two in five believing they need £100,000 or less. Alexandra Loydon, director of advice policy and operations at St. James’s Place, said the research demonstrates that action at a policy, industry and individual level is much needed. She said: “As a society, we face significant gaps in awareness and preparedness for retirement. The shift from defined benefit to defined contribution pension schemes has transferred the burden of saving for retirement onto individuals and, while the introduction of automatic enrolment into workplace pension schemes marked a significant milestone in promoting retirement savings, the harsh reality is that many individuals are facing significant shortfalls. “It is concerning that many people lack an understanding of how much they need to put aside to fund a moderate or comfortable standard of living in retirement and are not confident they’ll reach these standards by retirement. Even among those approaching retirement, confidence is worryingly low. Opinium surveyed 6,000 UK adults between December and February on behalf of St James’s Place. Additional research was conducted with 2,060 adults between 26 and 28 March.

1 in 5 have no pension savings says report

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