8th September 2014
While the upcoming overhaul of the UK’s pension system has been widely applauded it has unfortunately done little to help the savings crisis as millions are not planning to retire.
The government has introduced new rules which will allow savers to do as they wish with their pension pot at retirement age from April 2015, but research from fund manager Baring Asset Management has found that one in seven, or 14% or non-retired people, the equivalent of around five million individuals do not plan on retiring.
The total represents the same number in last year’s analysis from Barings – and the highest figure since its annual study began in 2008.
Uncertainty surrounding retirement planning remains high with a third, at 34%, of non-retired people not knowing when they will retire – the equivalent of around 12m people. Significantly, the findings reveal a bleak picture for those aged over 65, with 30% uncertain of when they will retire compared to 18% in 2013, 15% in 2012 and 15% in 2011.
This year’s research from Barings found that, overall, the average age people say they plan to retire is 63 years old – though for people aged 25-34 years old, the expected age is 61. For people over 65 who have yet to retire, this year’s survey found that their expected retirement age is 70.
Rod Aldridge, head of UK wholesale distribution at Barings, said: “It is apparent that retirement planning, especially among the over 65s, has become increasingly unpredictable over the last few years. In light of the recent changes to the pensions system, the concern is that this age group may have to compensate for insufficient pension provision and financial planning. What’s more, with the increasing longevity of the British population, such problems may become a growing trend.”
The findings from the research commissioned by Barings also reveal a third of people – the equivalent of 12m – say they have no pension, a figure that has remained largely the same since the annual survey was first carried out in 2008. Regionally, the survey also found that the North West had the highest proportion of people with no form of pension, at 41% while London was found to have the highest proportion of people with a pension, at 71.
While the number of men with no pension has steadily declined, from 30% in 2008 to 25% in 2014, the number of women has risen, to 41% from 39% in 2013.
Aldridge added: “We are concerned that so many people who should have plans in place say they do not have a pension. This confirms the need to focus on effective retirement planning. We urge everyone to seek a better understanding of the benefits they can get from planning ahead and, especially to think about retirement provision early.”