A significant minority of people are heading for a retirement which is going to be very tricky to fund: they have neither a private nor a workplace pension.
A new study by Aegon, the Readiness Report, found that as many as one in seven people aged between 55 and 65 face going into old age with just the state pension to rely on. That’s a total of 1.2 million. In terms of gender, it includes 12% of men and 20% of women.
This is by no means a problem only for those in their 50s and 60s – the number with no private or workplace pension peaks at 41% for those aged 25-34, then drops to 16% for every other age group.
The good news is that with younger people being automatically enrolled into a workplace pension as they start out in their careers, they’re more likely to build up a reasonable sum for retirement. That’s assuming they don’t opt out…and with the high costs of living, many younger people may be spending the money they could be saving into a retirement fund on housing and food. Retirement also seems a long way off when you’re in your mid-twenties, so the importance of pensions savings can take a back seat.
Also, auto-enrolment doesn’t include everyone, so some will still be left with very basic retirement provision. Such people include the self-employed, those working in the so-called ‘gig’ economy and employees who don’t meet the earnings or age criteria for auto-enrolment.
If you are an employer, remember that it’s your duty to provide a workplace pension for your staff. You might also like to consider offering guidance and help on how to save for retirement and other contingencies. Increasing studies are showing that financial as well as health and well-being guidance from employers are useful recruitment and retention strategies.