More than a million workers are hurtling heading towards retirement without any pension savings, according to new research.
Pension firm Aegon has revealed 1.2 million workers have nothing but the state pension to fund their retirement.
The problem is more serious for women – with one in five aged between 55 and 65 having no savings.
The number drops to one in eight men of the same age.
The firm’s Readiness Report also shows that the uptake of pensions increases when people start work, but then flattens.
On average, 41% of workers aged 18 to 24 years old do not have a pension, which drops to 16% from the age of 25 and remains the same at around one in seven workers without a pension until retirement.
Saving priorities wrong
The company’s head of pensions Kate Smith is concerned that saving priorities for retirement are wrong.
One factor impacting retirement saving is house prices.
Savers put buying a home ahead of putting money in a pension,
“There is likely to be a portion of people who prioritise a house purchase above other long-term saving. The size of deposits required now can mean it takes longer to get on the property ladder, which will have a knock-on effect to free up cash to save into a pension,” she said.
Another issue for savers are those who consider they cannot or will not save for retirement.
“A portion of the population feel unable to or unwilling to save for retirement. This may include those who are self-employed or in the gig economy and those employees who do not meet the earnings or age criteria for auto-enrolment,” said Smith.
More than the minimum
“Others may consciously opt out of a workplace pension because of affordability or because they do not recognise the benefits of pensions over other forms of saving.”
The answer, argues Smith, is that the government should focus more on pension saving.
“The government should talk more about the importance of pensions and saving with your employer to save for yourself. The value of pension saving needs to be a priority. Everyone should be saving more than the minimum to build a bigger pension pot,” she said.
“It is likely that those without pension savings are reliant solely on the state pension, as they may not have other savings.”
