A recent survey done by HSBC finds that a generation of Brits is either ignoring or refusing to accept the changing needs of retirement provisions in UK.
The report titled ‘The Future of Retirement’ published on 26th May found that the present generation of Britons was well aware that they will live longer and conventional company and state pensions may not be sufficient.
The HSBC survey, conducted among 1,000 working age professionals found that only 27 percent expected to be better off than their parents in retirement while half of them thought they would be worse off.
Nearly 1 in 5 had no idea of their retirement income while another 21 percent said they will depend in state pensions.
Among those who thought they would be worse off than their parents, three in five attributed company and state pensions to be less generous than previous generations.
48 percent of total respondents and 57 percent of women in 30s and 40s were worried that they were not saving enough for their retirement while 68 percent overall were not sure if they will be able to cope with retirement income. Only 39 percent Britons had prepared for their futures.
“The emergence of this ostrich generation is a real concern”, said David Wells, head of investments, pensions and savings at HSBC.
“Britons know that they need to plan and save more for their retirement, yet are not turning this knowledge into action”, he said adding: “People need to look around and take proper stock of what they need to do – they can no longer totally rely on the state or their employer to provide for them. In the 21st century it is all about taking individual responsibility”.
Seconding the HSBC report, Tom McPhail – head of pensions research at Hargreaves Lansdown said: “The most significant step to resolve this problem will be the government’s auto-enrolment plan, which will mean that by 2016 the vast majority of employees will be members of a pension”.
Talking about the size of the pension pot, he added: “This is only half the battle though, the next great challenge will be to persuade adults right across the spectrum of ages and incomes that simply joining a pension isn’t enough; the amount you pay in is also vitally important”.
Cautioning that the current savings pattern may not be enough, he said: “Average contribution rates to money purchase pensions are stuck at around 10 per cent of earnings; the default auto-enrolment contribution rate is just eight per cent of earnings”.
Urging people to do more, he said: “without increased commitment and engagement millions of people will find themselves living out a brief and disappointing retirement”.