The proportion of people retiring without a private pension has halved over the past decade, but one in eight Britons retiring this year are still in this position, data suggests.
In 2008, 23 per cent of people about to retire expected to do so without any private pension savings. This year, that proportion stands at 12 per cent, according to a survey of 1,000 people about to retire by Prudential.
The proportion of women entering retirement with no private pension of their own has also shrunk – from 32 per cent in 2008 to 18 per cent this year.
The proportion of women entering retirement with no private of pension of their own is more than double that of men, research shows
However this is still more than double the proportion of men as just 7 per cent of their male counterparts retiring this year have no private pension.
It comes as recent, separate figures show women are reaching retirement with pension savings worth £59,000 on average, just two-fifths of the £143,000 held by men.
Prudential also found that 10 per cent of people said they will be totally or somewhat reliant on the state pension to fund their retirement, with others having some other form of savings.
On average, people expecting to retire this year estimate the state pension will account for around a third of their income in retirement, which is lower than the 35 per cent recorded in recent years.
‘The long-term trend for the number of people retiring without a pension is down and that is good news. But there is still some distance to go and it is worrying so many people will be entirely reliant on the state pension for their income in retirement,’ said Stan Russell, retirement income expert at Prudential.
‘While the state pension is an important part of retirement income, it shouldn’t be the only part and those still in work should if at all possible be contributing to a pension and saving towards their retirement.’
Prudential said that people relying exclusively on the state pension could retire with an income of around £1,452 a year below the Joseph Rowntree Foundation’s minimum income standard for a single pensioner.
Word ‘retirement’ is outdated…
The term ‘retirement’ generally evokes connotations of withdrawal, seclusion and even loneliness.
However, this doesn’t reflect how recent retirees really feel about their lifestyles, with more than half (56 per cent) claiming the definition is out of date.
A survey of 1,000 recent retirees from RCI Bank suggests two thirds of are spending more time with their families, a quarter have taken up a new hobby, while 43 per cent spend more time with friends and 41 per cent travel abroad more.
The findings come as more people are saving into private pensions since the introduction of automatic enrolment into workplace pensions in 2012, with around nine in 10 people staying in their pension scheme rather than opting out.
The Department for Work and Pensions said the current rate of opt-outs is around 9 per cent – although some analysts believe the real figure is slightly higher.
Currently, the combined minimum contribution from employees and employers is 2 per cent of qualifying earnings. But from next month this will rise to 5 per cent, with a minimum of 2 per cent from the employer and the remaining 3 per cent from the employee.
In April 2019, the rate will increase again, to 8 per cent, with a minimum of 3 per cent from the employer, leaving a 5 per cent minimum staff contribution.
Minimum contributions are gradually being increased to help encourage people to save enough for a comfortable retirement – but experts have raised concerns that the number of people opting out may increase after the changes come into effect.
Guy Opperman, Minister for Pensions and Financial Inclusion, said: ‘We have already reversed two decades of declining pensions saving through automatic enrolment, with more than 9.3million people now newly saving or saving more for retirement.
‘But there is still more to do to ensure that everyone is building up good private pension savings. This is why we are increasing contributions in April, and we have recently announced a package of measures to ensure that even more people benefit from a workplace pension.’
|People retiring in…||Men without private pension||Women without private pension||All retirees|
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