New research in Spring 2015 from Aegon UK reveals that just 7% of the UK population are on track for the retirement they aspire to, exactly the same percentage as in April 2014. Aegon’s third UK Readiness Report – the latest in a series of reports that looks at attitudes towards retirement – has a particular focus on levels of engagement with workplace pensions. It finds that the nation’s ‘readiness score’ has actually fallen over 12 months from 52 to 47. The people surveyed said that they wanted to retire at age 63, contributing to the falling score, as people’s expectations about the amount of money they hope to retire on each year rose from £35,000 to £42,000, despite the fact that this would require a saving pot of more than £1m, a sum higher than the new pension lifetime allowance.
The lack of preparation for retirement should be set against the backdrop of large scale change in the pensions industry. More than five million people have now been auto-enrolled into a pension scheme by their employer in an attempt to improve retirement readiness. However, 41% of employees don’t know how much of their salary they’re contributing to their pension pot, and 59% say they have no idea how much their employer is contributing. On top of this, half of the UK’s workers have no idea how much they have saved into their company pension so far. 35% of those in employment don’t even know whether they’re eligible to be auto-enrolled into a company pension.
Half of the survey sample of 4,000 respondents have never done anything to review their retirement plans, and 55% have never checked the performance of their retirement savings. It is therefore perhaps no surprise that less than two in five (38%) feel confident about being able to retire at their target retirement age.
There is, however, positive sentiment about the idea of having a workplace pension and the desire to save for the future. 79% plan to rely on their workplace pension as their main source of post-retirement income, and just 6% said they’d leave the auto-enrolment scheme when the minimum contributions rise to 5% in 2018. In fact, one fifth said they would go so far as to increase the amount they saved beyond the minimum requirement.