Less than one in 10 of the British public are confident they have saved enough in their pension for their retirement.
That’s the finding of a survey conducted by insurer NFU Mutual of more than 2,000 people from across the country. Just 9% say they are “very confident” of being comfortable in retirement.
However, there is an unfazed attitude towards the pension shortfall by many, especially younger people. They may think they have time to address the issue of insufficient pension savings, or simply find it difficult to engage with the idea of what they’ll need for retirement as it’s so far off.
Among 18- to 24-year-olds, only 23% are “nervous” about their finances in retirement compared to 40% of 35- to 54-year-olds, the survey found.
The survey also showed that only 6% of those surveyed make the maximum contribution into their pension pot, with 11% of workers opting out of paying anything into a pension.
The situation is much more dire among the self-employed, with 77% of respondents paying nothing towards their retirement.
Overall, respondents on average thought that £17,578 a year was enough to live on for a basic retirement lifestyle, with £33,210 necessary for a desirable lifestyle.
Subtracting the current full state pension (£8,767) from those totals, a pension pot would have to be able to pay out £8,811 and £24,443 respectively to meet the basic and desirable retirement income targets.
Someone aged 65 would need £350,000 to buy an inflation-proof annuity paying enough to achieve the basic retirement lifestyle; they would need £985,000 for an annuity that funded a desirable lifestyle, according to the government’s Money and Pensions Service.
Richard Needham, senior pension expert at NFU Mutual, commenting on the mismatch between expectations and reality, said: “A lot of people are nervous about their financial future, with many unsure about how much they need to have saved in order to pay for the retirement lifestyle they would want.”
NFU Mutual’s survey also discovered a significant gender gap in retirement savings. Whereas 13% of men have no pension savings, 19% of women find themselves in that unenviable position.
When it comes to paying the maximum into their pension funds, only 4% of women are able to do so but it is more than double that figure for men, at 9%.
In terms of being “very confident” about having the savings for a comfortable retirement, only 6% of women compared to 11% of men, were able to agree with that statement.
Women’s poorer relative position is partly explained by the fact that many take a break from work because of caring responsibilities. But notwithstanding the impact of those absences on women’s income, there is also an element of discrimination that means women still earn less than men and as such will have less available to pay into their pension.
“Women are more likely to be placed in pension poverty with the gender pay gap certainly contributing to this situation, and our data suggests they are more nervous about the future. It’s important women take financial advice surrounding their pension and regularly review their plans,” advises Needham.