Middle-aged Brits are failing to engage with pensions and risk an impoverished retirement, according to a new survey from the Financial Conduct Authority (FCA).
In the survey, Financial Lives, the regulator conducted more than 12,000 interviews with British people of all ages about their experiences of financial services and the products that they use.
The report revealed that advancing age is not providing enough of a push to encourage people to save, with only 35% of those aged between 45 and 54 giving serious thought to the issue of how they will pay the bills once they have retired.
A similar number also did not know how much they, or their employer were paying into their pension.
Matthew Yeates, quantitative investment manager at Seven Investment Management (7IM) comments: “[The] survey findings suggest that a growing concern – how to manage in retirement – is all too easy to kick into the long grass. It is understandable to put off difficult decisions, especially when there are so many competing financial priorities. But the issue of how you might live comfortably in retirement is probably the most fundamental question of all, since it will inform your investment approach.”
He adds: “In the 55-64 age group, the number of people giving serious thought as to how they will manage in retirement increases to half – still a stark figure. The longer people take to address these issues, the less chance they have of achieving their retirement goals.”
The report also revealed that despite the introduction of auto-enrolment – where eligible employees are automatically signed up to workplace schemes – too many people are still missing out.
Since the scheme launched in 2012, eight million workers have started to save for their retirement. However, there is still close to double this figure who don’t have a pension at all.
Kate Smith, head of pensions at Aegon says: “Five years into auto-enrolment it’s shocking that 15 million people aren’t saving into a pension and many more are undersaving.
Too many people are excluded from auto-enrolment, low-paid workers, some with multiple jobs and the self-employed including gig workers.”
The government is currently conducting a review of auto-enrolment and it is due to publish its findings by the end of the year.
Ms Smith says it must tackle inclusion and make pension saving an option for all. “Pensions should be there as a default for all, no matter how much people earn, across how many jobs, in whatever form of employment.”
This article was first published by our sister magazine Moneywise, available online here.
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