A recent survey undertaken by pension and annuities website PensionCalculator.org has suggested that 80% of workers are not saving enough into their pension plans, even though they do not believe a state pension is sufficient to live on.
Of the 500 people who took the online poll, 83% said that they either did not know whether their pension savings would be enough or that they knew it would not be enough. The same people also said they did not think they could rely on a state pension to support themselves.
49% “definitely” haven’t saved enough
Although 12% are confident that they have saved enough to enjoy a comfortable retirement, 11% said they had saved quite a lot but would probably still need more money on retirement. Another 11% said they hadn’t saved anywhere near enough, while 49% said they “definitely” hadn’t saved enough.
The basic state pension is currently only £97.65 a week – a measly sum. It is unsurprising that only 5% of respondents thought they would be able to manage on this pension. More people felt it would probably be enough as long as it was combined with other funds but most people (63%) were convinced this amount would not be enough to retire on.
Samir El-Alami, editor of PensionCalculator.org, said: “I don’t know which animal analogy describes it better – rabbit trapped in the headlights or ostrich with its head in the sand. People are aware of the problem but seem to be doing nothing to proactively improve their situation, either because they are overwhelmed by the magnitude of the situation and unaware of how to ‘fix’ it or they have chosen to ignore it completely.”
Auto-enrolment “a step in the right direction”
Mr El-Alami praised the government’s introduction of auto-enrolment, calling it “a step in the right direction”. But he also warned that much more needed to be done to make people realise how important putting money into a pension scheme is.
People considering their pension and wondering about the options available to them would benefit from using a pension calculator or investing in a stakeholder pension.