A report published by Baring Asset Management claimed Brits are not saving enough for retirement and over thirty per cent don’t have any pension savings and nearly one in ten plans to bank on their property for retirement income.
More than 13.6 million British adults, amounting to one-third of the total adult population, do not have any pension savings, while 1.4 million individuals, who are 55 years or over have no pension pots.
The asset management company found a high percentage in the 18-24 years age group, are yet to start saving. More importantly, 47 per cent of the respondent in the older 25-34 years age group are yet to start saving for their the retirement, the report observed.
Another worrying aspect is that greater percentage of men are yet to start saving in a pension scheme, up at 30 per cent in 2011, compared to 28 per cent in 2010. However, women have improved over last year’s count; 44 per cent in 2011 have pensions savings compared to 44 per cent in 2010.
The annual survey conducted over a sample of 1,589 non-retired British individuals also found that more people are depending on their properties to fund their retirement.
The report found that 13 per cent of the respondents, up by 1 per cent over 2010 and 4 per cent over 2009, accepted that they are dependent on their properties for retirement income. More women, 14 per cent to be precise, were dependent on property compared to 12 per cent of men. Since the housing market is yet to recover fully, this remains an area of concern.
It is “highly likely” that more people have to work indefinitely even as they are approaching retirement age since they have no regular source of income, said Marino Valensise, chief investment officer at Barings.
“At the same time, it is concerning to learn that only half of people in their late twenties and early thirties are contributing into a pension scheme. Kick starting a pension around this time is absolutely paramount given the impact it has on the end sum. Investing into a pension little and often is a much better approach than not at all,” said Mr. Valensise.
The trend is worrisome, agreed Laith Khalaf, pensions analyst Hargreaves Lansdown, but hoped “auto-enrolment should improve matters although eight per cent contribution is just a start rather than the end of the matter.”
However, banking on properties was not a great idea, observed Mr. Khalaf.
“You will get income from your home by either downsizing or from equity release. However, this won’t happen if the market crashes. Should you put all your hopes on one single asset? I don’t think so,” he observed.
“In the short-term, there may be more people relying on their homes as a pension. However, five years ago, far more people would be relying on property as a pension but the credit crunch tempered people’s view of property and the realisation dawned that value can go down,” he added.