20% of UK Workers put Nothing in a Private Pension…
A fifth of workers are putting nothing into a personal pension, threatening poverty in old age.
It is hard times and people are having to jeopardise their pension income later in life favour of covering immediate bills such as mortgages, heating and food.
The proportion of those who are saving the minimum needed into a personal pension to provide a comfortable old age has fallen to an all-time low of 46 per cent, which is down from 51 per cent in 2010 and 54 per cent in 2009.
At the same time, one in five people over 30 have put nothing aside to provide any pension above that provided by the state.
It is estimated that workers need to save some 12 per cent of their income into a pension each month to ensure they have a comfortable retirement.
It said most people are hoping for a retirement income of £24,500 in order to provide a decent standard of living.
Based on a state pension of £7,300, this means they have to find another source to provide the remainder £17,200 of annual income.
However, in today’s financial climate, a worker would need to have a pension pot of £450,000 to buy an annuity that would offer an income of this scale.
This is three times higher than the average pension pot that most workers are likely to have based on their current savings pattern.
It is obvious that workers must either increase their savings substantially or change their expectations of when they might retire and how much income they will receive. There are particular fears for the one in five who have no personal pension.
Falling back on the state pension, property or a partner’s pension could be a fast track to poverty in late life.