Only one in seven UK adults have ever checked their pension.
- Almost a fifth (17%) of over 55s have never looked at their pension.
- Those that have reviewed their pension in the last year have mainly looked at the projected retirement balance (27%), while 10% topped up contributions.
Does this mean we don’t care about our standard of living in retirement? Don’t we want our lifestyle when we stop working to be as good as it is now? Or do we just not know how to go about it?
Consider this together with a recent headline suggesting that:
‘Living to 120 is becoming an imaginable prospect’.
Science, medicine, healthcare, diet, and other natural lifestyle changes have contributed to longer living ages, with those ‘extra years’ of our lives also being healthy ones.
Just how much is enough?
One of the UK’s major insurance companies (Scottish Widows) runs a annual National Retirement Forecast (NRF) survey designed to capture a snapshot of the UK’s future retirement landscape.
The forecast uses the Pension and Lifetime Savings Association’s (PLSA) ‘Retirement Living Standards’ levels to estimate the lifestyle that people might expect to achieve when they stop working. (The detailed summary is in the table above).
The main conclusion is that over a third of the population are not on target to achieve even the minimum lifestyle standard when they reach retirement.
Is your pension fit for purpose?
Will it fund the lifestyle you want in a longer retirement than you might initially have prepared for? Indeed, are you prepared?
[If you think this affects you, please call us or CLICK HERE to arrange a Pensions Review.]
A new think tank report highlights the need to increase pension contributions.
Over time, good ideas start to tire. Take, for example, automatic enrolment into workplace pensions, which is now eleven years old. Since April 2019, the mandatory minimum level of contributions has been 8% of band earnings.
Of that 8%, the employer must pay at least 3%, with the employee picking up the balance. Those percentages were legislated for in 2008, that’s almost another era in financial terms.
Were automatic enrolment being designed today, the minimum contribution rate would be considerably higher. Denmark and Sweden have a minimum of 15%, while Australia and Ireland are moving their contribution rates to 12%.
Life is changing. Lifestyle expectations are increasing. The cost of living is increasing too. And now, we’re likely to live longer!!!
As the report says, “The biggest single lever that can be pulled to increase the value of a future pension is the contributions paid into it over time.” Topping Up.
Time. Do we have it?
Whether it is us who have helped plan your pension or other advisers, we are here to help you review where you stand now, where you need to be, and how to bridge the possible gap.
If you think this affects you, please call us or CLICK HERE to arrange a Pensions Review.
The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.
Past performance is not a reliable indicator of future performance.