A rising number of workers are blaming a lack of cash for not saving enough in a pension, according to new research.
More than half (55%) complained about low wages limiting the money they have left to save after paying the bills, compared with 38% in a similar survey six years ago.
Lack of work was also another factor affecting saving for many.
A third explained they had no money left after paying day-to-day living costs and 18% said other expenses took priority over pension saving, says the report from pension administrators Equiniti.
Many (39%) also stated they did not know enough about pensions to make vital saving decisions and 13% said they did not know how much they should be saving for retirement.
Pensions misunderstood
Chris Connelly, propositions and solutions director at Equiniti, argues the responses show a need for better communication about the benefits and importance of pension saving.
“This survey clearly emphasises that pension saving is one of the first outgoings to be cut when money is tight – it is not prioritised,” he said.
“With the state pension unlikely to sustain a good standard of living in retirement, it is absolutely crucial that people do put away money for later life whenever they possibly can – particularly given the additional payments that employers will make in workplace schemes.
“People don’t understand a pension: don’t value the benefit and it is not seen as a priority which is naturally going to lead to the conclusion that the monthly contributions could be better utilised. Plans to set saving targets would get people to focus explicitly on how much they need to put away before retirement, to plan ahead financially and increase support through the accumulation period.”
Saving targets
Retirement saving targets is a move supported by trade body the Pension and Lifetime Savings Association, which gives a voice to financial firms offering pensions.
“Until people value the benefits of building up retirement savings, like, the ability to stop working earlier or travel more in retirement, then it will remain bottom of the list when the monthly pay packet comes in. Making the process of saving more accessible and putting a tangible objective in place that will result in tangible rewards and should encourage better behaviours and continue to build on the good work of auto-enrolment,” said Connelly.
