Four out of 10 of people still in work have made no pension provision whatsoever and will have to rely on the state for an income in retirement, according to a large-scale survey of British attitudes.
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Many people aren’t taking the steps necessary to have a comfortable income in retirement. Four in ten (39%) of those who haven’t retired have no form of pension provision above that offered by the state pension. And yet most people (60%) think that a pensioner living solely on the state pension or other benefits for pensioners is “hard up” or “really poor”.
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Many say they simply can’t afford to save for retirement at the moment – 50% of people overall, rising to 72% of those with no private pension provision. Those with no private pension provision are more likely to be young, female, unemployed or otherwise not in work, have no qualifications, or on a low income.
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Working longer and retiring later has been suggested as one way to fill the socalled ‘savings gap’. But current attitudes and behaviour suggest there is limited support for this. Over half (55%) those pensioners interviewed had retired early.
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And just 20% of current employees plan to retire after the state pension age (currently 60 for women and 65 for men). However, those who expect a low income in retirement are more likely than others to intend to work beyond state pension age, suggesting working longer may be a strategy for some concerned about their finances in older age.
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The public are keen for the government to increase spending on pensions. Three quarters (73%) think more should be spent, making pensions one of the most popular targets for additional welfare spending. But this is not straightforward:
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• The strongest support for increased spending on pensions is found among those who will benefit from it, and is lower among those who would pay the taxes.
• Even among those who would like extra spending on pensions, only 52% actually support the necessary increase in taxes and government spending.
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Researcher Miranda Phillips says “It’s clear that future pensions policy will require a substantial change in people’s attitudes and behaviour if it’s to close the so-called ‘savings gap’. While there’s overwhelming support for the idea of personal saving, many people simply feel unable to put money aside for retirement at the moment.”
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Notes:
1 Of those who have not yet retired, 51% have no current pension scheme (to which contributions are being made), and 71% have no ‘frozen’ pension (to which no contributions are being made – for example, from a previous employer). When combined, this means that 39% have no past or present form of pension
arrangement.
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