Britain’s personal finances have been surveyed by the Financial Conduct Authority and it has been found that around 15 million people have no pension savings at all and are looking at a dismal retirement, depending solely on the UK state pension.
How many people will rely on the State Pension?
The FCA’s survey is the largest to have been carried out on this subject. The results unearthed that 31% of adults in the UK will be fully reliant on their state pension, as they have no additional private retirement fund. The full amount of UK state pension totals £159.55 per week, but only those who have a complete record of national insurance contributions are eligible for the full amount.
The figures reveal that even those who belong to company pension schemes may not benefit as expected from their final salary arrangement, which will be based upon their most recent income before retirement. Only 16% of people in employment have a final salary pension, whereas 41% have a ‘defined contribution” (DC) pension and have missed out on a secure amount, as their payout will be influenced by fluctuations in the stock market.
Half of people who have already accessed their DC pension have expressed that they believe their payments are not enough to live on; 40% of people on DC pension schemes have less than £5,000 in their pension fund.
What does this mean for those closest to the Pension Age?
The most at risk of having a difficult retirement are those aged over 50 who are not paying into a pension, this may include the self-employed and part-time workers who do not have the same work pension benefits as full time employees, or stay-at-home parents. Above the age of 50, your time to build a pension pot is obviously limited, as you near the UK pension age.
Of the over 50s surveyed by the FCA, 32% explained that they had made no additional contributions to their retirement because it was too late to set one up. While 12% stated that they will be reliant on their partner’s pension and 26% said that they simply could not afford the fees.
This report has uncovered a collective malaise when it comes to pensions. A third of people have reportedly given no thought to their financial retirement plans and 40% of 35-44 year olds were unaware of how much their company was paying into their pension fund, leaving excessive amounts of people dependent fully, or predominantly, on their state pension.
If you are interested in starting a pension or would like clear guidance about your pension options, contact Acumen Financial on 0151 520 4353 or browse our pension information and request a free consultation with a financial adviser via the Acumen website.