As the cost of living rises and people live longer, the financial strain on retirement will continue to increase and MGM Advantage warns that people cannot afford to miss out on saving into a pension and that it is never too late to start.
The research shows that those aged 55-64, 2.6 million (38%) do not expect to get retirement income through a pension and will be relying on other savings or investments.
This is highly concerning for an age group that should be fully engaged in financial planning for retirement and have an established pension.
As well as this, the younger adult population is at risk of falling into difficulty at retirement through lack of pension scheme investment.
Nearly two thirds (62%) of 18-24 year olds and almost a half of those aged 25-34 (46%) do not expect a pension of any kind to provide them with an income. Moreover, 42% of 18-24 year olds have no idea where their retirement income will come from.
There is a stark difference between men and women’s reliance on pensions for income in retirement. Half of women (50%) say they do not expect a pension to provide them with an income, compared to just over a third of men (36%).
Overall, a quarter (24%) of British adults do not know what savings or investments will provide them with income in retirement, demonstrating a high level of apathy and uncertainty for financial retirement planning across the board.
Craig Fazzini-Jones, Director at MGM Advantage, comments:
“With tax relief for all pension options and employer contributions for company schemes, pensions are the best way to save for retirement. Opting out of a company pension scheme is essentially throwing money away, so it is crucial that people discuss pension options with their employers.
“It is also concerning that so few know how they will get their income in retirement. However, it is never too late to take action and even at the point of retirement many people can increase their retirement income simply by using the Open Market Option to shop around for an annuity.
"Doing so can pay dividends, particularly for those individuals with health conditions which entitle them to an enhanced annuity. Indeed our research2 shows that the difference between the average standard and enhanced annuity rates is 16.35%.”
When it comes to sources of income for retirement, occupation or company pension schemes were rated as the most likely. Savings, bonds and ISAs ranked second, followed by personal pensions and own property respectively. Stocks and shares, buy-to-let and stakeholder pensions were the least likely sources.
