Millions worried about retirement advice
According to the latest research by Aviva in their Working Lives Report, millions of workers are worried about retirement advice and uncertain about their retirement prospects. Many are worried that they will not have enough money to retire. The comprehensive report found that:
- 22% of employees are not certain that they will have a comfortable retirement. That means more than 6 million workers.
- It gets worse for the over 45’s, with 26% concerned.
- Almost 40% think that their pensions will NOT be enough for them to retire.
- Only 20% think that they have saved enough for retirement into their pensions and
- 10% have no idea. Equal to almost 3 million people with no clue.
- Over 75% of workers also said that they were worried about their finances due to the cost-of-living increases.
- Despite auto enrolment and many other government led pension education initiatives, 80% of people said they would like more information and retirement advice from their employers.
- 40% wanted to know how to build up their pension pot and 45% wanted to know how much they would need to retire.
A lot of the findings are backed up by a report from the investment comparison site Investing Reviews, which found that:
- 78% said that the UK pension age should be lowered
- 70% think it’s harder to afford to retire nowadays than it was in the past because of rising costs of living
- 33% don’t think they will be able to retire comfortably (as opposed to the 22% in the Aviva survey)
- And a massive 42% said that would like to retire abroad.
- 30% don’t think that their employer offers enough retirement advice and help.
- 35% didn’t know how much their pension was worth.
It seems that more pension education is needed.
That could also apply to the state pension as well. The latest figures show that:
- Only 50% of people are receiving the full rate of the new state pension (changed in 2016)
- Compared to 75% of people who received the full state pension at the old rates.
- The new rates only apply to men born after 1951 and women after 1953.
But the figures are currently bleak. According to the Office for National Statistics (ONS):
- The average income from personal pensions fell to £939 a year at the end of March 2022. That’s a 14% fall on the year before.
- Income from workplace pensions also fell on average to £10,140
- Making an average total of £11,079 in private pension income.
- 28% of over 55’s have no other pension to rely on other than the state pension
- It’s the same figure for 18- to 35-year-olds, so the situation doesn’t seem to be improving with more education.
Having said that overall pension income is up by over £100 a week in the last 20 years. The average income is now £390 per week. This is made up by income from different streams depending on circumstances. But on average income from benefits is £257, private pensions £213, income from investments £59 and average income from earnings is £74.
The new autoenrollment changes should help. The new rules take away the lower earnings limit which means that employees will be paid pension contributions on every pound that they earn. The age limit for contributions has also been reduced from 18 to 22. Estimates suggest that this will mean that employees will receive an extra £500 into their autoenrollment pension each year. For an 18-year-old that could be worth an extra £120,000 at retirement.