March 15, 2023
In recent years a number of government initiatives have aimed to encourage people to save for their retirement- including auto-enrolment in workplace pensions. Despite this, 20% of people in the UK still have no pension savings at all. Even when it comes to people in their 50s, so well within sight of retirement, one in six people (16%) still have no private pension savings. [1]
There are a number of reasons for this. Some people simply don’t feel they have enough spare income to meet their living costs and have some left over to put into a pension pot, and the current cost-of-living increase definitely isn’t helping. Worryingly, though, some people still aren’t aware of the need to save for their retirement.
But the most common reason that people give is that they believe they will have plenty of time to start saving later in life.
The truth is, that it’s never too early to start your pension pot. The sooner you start, the
more time your money will have to grow.
With around 17% of people in the UK aged 55 and over admitting to having no pension savings other than the State Pension), a worrying number of people are missing out on the opportunity to plan early for a more comfortable retirement.
In your 20s and 30s is not too soon. But it seems that the message isn’t getting through just yet.
Nearly a quarter (24%) of adults under 35 despite being a generation to benefit from auto-enrolment into workplace pensions.
After 35 this number drops to one in five, and then to one in six for the over-55s.
So people do start to save more as retirement draws nearer, even if they have missed out on the opportunity to save over many years.
Lack of pension savings is a particular problem for people not in full-time employment.
While, just 8% of respondents who worked full time said they had nothing in their pension, for part-time workers this figure was 24%.
Perhaps unsurprisingly, the people worst affected tend to be those not currently working at all – whether because they are unemployed or because they are full-time parents. Nearly 60% of this group said they had no pension savings.
Where this is because of full-time parenthood, the parent in question may be relying solely on their partner’s pension in later life. Whilst this is, again, understandable, it carries risks. One person’s pension may not be enough to support a couple in later life; and what happens in the event of a relationship break-up?
One in five people don’t know how much they have in their pension savings. You might expect this number to shrink as people get older, but actually it gets worse! While 14% of under-35s are unsure, this rises to 22% between the ages of 35 and 54, and then to 24% among the over-55s.
For some people, there may be an unexpected outcome, and even though they think they have no pension savings, they actually have pension pots from previous jobs (or even their current job) that they don’t know about.
The first step for anyone who thinks they have no pension-savings is to contact the government’s Pension Tracing Service and search through their previous employers to see if they were ever a
scheme member.
Although some of the figures above are worrying, at Talis IFA we prefer to take a balanced view. There is nearly always something you can do to make your money go further.
There are a number of ways you can save for retirement, such as through a workplace pension or a personal pension. So, if you haven’t already started, now is the time to do something about it, even if you’re not far away from retirement.
Everyone’s circumstances are different, so to discuss your situation or concerns you may have about a pension shortfall, please get in touch.
Source data:
[1] Survey by Unbiased and Opinium of 2,000 non-retired UK adults, conducted June-July 2020.
A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless plan has a protected pension age).
The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available.
Your pension income could also be affected by the interest rates at the time you take your benefits.
Tax treatment varies according to individual circumstances and is subject to change.
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