- Over half of savers not confident they are saving enough for retirement
- Over a third (37%) wrongly think the auto-enrolment minimum pension contribution level is the Government’s ‘recommended amount’ to be comfortable in retirement
- Survey released as part of this year’s Pension Awareness Week and top tips published
Millions of UK savers are scratching their heads and left wondering if they are saving enough for their retirement, a Pensions and Lifetime Savings Association (PLSA) survey has revealed.
In its research – released as part of Pensions Awareness Week –PLSA data showed that over half of respondents saving into a pension, equating to 18 million adults, said that they were not confident that they were saving enough into their pensions to let them live the lifestyle they want in retirement (56%). A quarter simply didn’t know (24%). Only a fifth (20%) said that they were confident they were saving enough.
The survey findings also showed that men were more likely to agree that they were saving enough (27%) compared to women (14%). Mid-high income earners (£30,000 - £49,000) were more likely to feel confident in their savings (30%) compared to those in the mid-low (£10,000 - £29,000) (19%) and lower income band (less than £10,000) (13%). Homeowners were also more likely to agree than renters that they were confident they were saving enough (25% compared to 14%).
It’s been almost seven years (October 2012) since automatic enrolment was launched and a year and half (February 2018) since it has been fully rolled out with the level of pension contributions phased in over time to help employers and individuals adjust.
Just over a third of respondents (37%) believe the Government has set the level of pension contributions to ensure that everyone will be comfortable in retirement while 34% disagreed and 29% didn’t know. It added that women and men were as likely to agree with the statement (37% for both).
In April 2019, minimum automatic enrolment contributions were raised to 8% with 5% being paid by employees and 3% paid by their employer. While the lift in minimum contributions is welcome, when combined with the State Pension for many people it will still be insufficient to provide an adequate income in retirement.
The research forms part of the PLSA’s work as part of Pension Awareness Week; a campaign to raise awareness of retirement planning across the country.
The PLSA is launching new Retirement Living Standards at its Annual Conference in Manchester on 17 October to empower people to better understand what kind of lifestyle they can expect for their retirement.
Julian Mund, Chief Executive, PLSA, said: “It’s clear that savers are still unsure about exactly what their pensions are worth and what this will translate to in terms of real income in their retirement years.
“This Pensions Awareness Week, we want savers up and down the UK to think about their contributions so they know exactly what they can do to ensure they have the retirements they want. It’s never too late to start thinking about your pension, which is why we’ve published our top tips.”
- DO join in your workplace pension if you have not done so already. One of the main benefits of a workplace pension is that your employer has to pay in too.
- DON’T assume that the amount you are saving into a workplace pension is enough. The Government’s minimum workplace pension contribution level is 8%. Just over a third (37%) of people wrongly think this is the Government’s ‘recommended amount’ to be comfortable in retirement.
- DO consider whether you could be saving more for your retirement. Also ask whether your employer would match the contributions. A third (32%) of people said they could afford to save more towards their pension. While not everyone will be able to afford to, if you can put more into a workplace pension it’s possible you could also benefit from higher contributions from your employer.
- DON’T ignore your annual statement from your pension provider. It’s important to read your statements and consider whether you need to take any action as a result. For example, paying more into your pension, updating your expected retirement age, or consolidating different pension pots into one with lower charges.
- DON’T be afraid to ask questions. If you have any questions about your pension pot, such as charges or your investments, your scheme provider will be able to help. The Pensions Advisory Service is a free and impartial government guidance service. They offer free pension guidance appointments over the phone or local to you. They can be contacted over the phone on 0800 011 3797 or visit www.pensionsadvisoryservice.org.uk.
- DON’T think that it is too late to start saving. If you haven’t been paying into a pension previously, and you think that there is no point starting now, don’t be discouraged. The added benefit of your employer’s contributions, the tax breaks you get from the Government, and investment growth all mean that your money will go further than you think.
- DO spend time thinking about how you want to access your money in the lead up to retirement. Deciding what to do with pension savings is a very complex decision and sometimes you only have one chance to get it right so it’s important to dedicate some time to retirement planning. Consider taking financial advice.
- DO make use of the support available when you approach retirement. Pension Wise is a free Government guidance service offered to people aged over 55 to help understand the different options available at retirement. They can be contacted over the phone on 0800 138 3944 or visit www.pensionwise.gov.uk.
- DON’T fall into a scammer’s trap. Be wary if a company approaches you out of the blue – whether over the phone, by email, or in person – and if they make claims of high returns with low risk, or tax loopholes. If it sounds too good to be true, it usually is. Visit: www.pensionwise.gov.uk/en/scams for more information.
- DON’T forget to ask about paying into your pension during your parental leave. You may have been tied up planning for the arrival of a new person to your household, but it’s important to not forgo valuable pension contributions from your employer whilst you’re on parental leave. Usually your employer will pay in to your pension the same amount of contributions, with you paying in a much reduced amount. Talk to your employer or your pension scheme to find out more.
The PLSA commissioned Populus to undertake an omnibus poll of approximately 2,096 individuals aged 18 to State Pension Age (SPA) in the UK. The poll was conducted between 28 and 29 August 2019. Data has been weighted to be representative of the UK population.
There are 32,811,000 people aged over 16 in employment in the UK (April/June 2019 –ONS).
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