The average size of a British saver’s pension pot on retirement has soared to £50,000, according to research by a giant financial firm.
Pension funds have surged by 42% or £21,000 from £29,000 in April 2015.
Money experts at Aegon, which carried out the survey, believe the massive increase is due to more people thinking about financial planning triggered by the start of pension freedoms in April 2015.
Researchers found that half of working adults had not reviewed their retirement plans before pension freedoms were introduced.
Since then, the uptake has increased by 15% to two thirds reviewing their financial plans – with one in five taking on the task in the past six months.
More realistic saving goals
The rising number reviewing their plans has also led to people taking a more realistic view of how much money they need to fund a comfortable retirement.
Instead of an annual income of £38,000, cited by most a year ago, now savers feel £32,000 is more reasonable.
The figure was £41,000 in April 2015 when pension freedoms started.
The average UK income in April 2016 was £28,200 a year.
Giving reasons for not saving, one in five (22%) claim they don’t understand how to review their retirement plans , 15% say the lack of online services or information stops them checking their pension savings and one in ten people (12%) fear seeing how little they have saved.
Savings revolution
“The proportion of people speaking to an adviser about their retirement saving and income options is almost double what it was in April 2016,” said the firm’s pension director Steven Cameron.
“Giving retirees the freedom to do as they please with their money is having an impact not only on those who are taking advantage of that freedom today, but the trickle effect is positive down the generations.”
Cameron also explained pension freedoms had triggered a savings revolution among younger workers as well, with 5.5 million people prompted to save for retirement with auto-enrolment to workplace schemes.
“Over a third of the adult population have never taken any action that affects their plans for retirement and these people must be encouraged to engage and save more, or face an uncertain future,” he said.
