90% of Brits not saving enough for retirement
Around nine in 10 Britons' retirement savings are falling well short of what they need to live on in retirement, according to a major new survey of people's saving habits.
The Aegon UK Readiness Report indicates that just 7% of the UK population is close to being ready for the retirement they want, with the average person falling £23,000 a year short of what they would ideally expect to live on in retirement.
Yet close to half (42%) of people have never even bothered to check how their existing pension savings are performing.
The report, produced from interviews with 4,000 people, shows that the average person would like to retire with an income of £35,000 a year, but are only on track to retire with an income of £12,000 a year.
David Macmillan, managing director of Aegon UK, said: "We know that most of the UK population are falling short of their retirement objectives, and that many aren't reviewing savings enough to be aware of the shortfall. It's time for the UK to get real, and for the pensions industry to lead the way in helping people find solutions. Showing people how to take small steps that will make a difference is vital. We must empower, rather than frighten people, and help them take control of their future finances."
In the Budget, the government announced it would give consumers greater control of how they convert their pensions into an income fro April next year, while auto-enrolment will see all employees automatically enrolled into a pension scheme.
However, employees will be able to opt out of auto-enrolment, unlike in countries such as Australia, where retirement saving is mandatory.
Aegon also says people mistakenly believe the State pension is higher than it is, with 54% of people thinking they will receive far more than the current £110.15 a week. Moreover, most people expect to retire at age 63, while the state retirement age will be 65 for both men and women in 2018.
The State retirement age is expected to rise to 68 by the time current under-25s reach retirement – yet Aegon says this age group currently expects to retire at 64.