Over a quarter of savers with a workplace pension believe their current pension savings will not be enough to support them when they retire, according to a Pensions and Lifetime Savings Association (PLSA) survey.
According to the survey conducted on behalf of the PLSA by Yonder Data Solutions, savers have reported that they have long-term concerns as to their financial health when they stop working.
It found that 29 per cent of those aged between 35 and 54 were most concerned that they wouldn’t have enough to live off, compared to 20 per cent of those aged over 55. Just under a third or 31 per cent of women were concerned, compared to 21 per cent of men.
Around 35 per cent of those in low-income households with a total income of up to £14k and 31 per cent of those with a total income of £14k – £28k expressed anxiety. For those in households with an income of more than £48k, this figure lowers to just 20 per cent.
One out of every five people polled said they save into a pension to secure a minimal level of life in retirement; a pension that covers all of their basic requirements.
But 41 per cent say they save to ensure a moderate standard of living in retirement while 33 per cent say they save to ensure a comfortable standard of living. One out of every eight people said they didn’t know what standard they would reach with their current savings and just one per cent stated that they never plan to retire completely.
The PLSA continues to propose that, in order to help savers achieve a better quality of living in retirement, the government should boost automatic enrolment payments from 8 per cent of a band of earnings now to 12 per cent of total salary in the early 2030s.
By 2030, the pension contribution would be “levelled-up” – a 10 per cent payment split evenly between employers and workers – with companies paying 2 per cent more than they do currently and employees not being required to make any additional contributions. Then, when it becomes feasible in the early 2030s, employers and employees would each be asked to contribute an additional 1 per cent, bringing the total contribution to 12 per cent.
PLSA director of policy & advocacy Nigel Peaple: “We have long argued that current contribution levels are not likely to give people the level of retirement income they expect or need. As the Government seeks to ‘level-up’ the economy, narrowing wealth disparities between regions and different demographics, we think now is the right time for the Government to commit to levelling up pensions, gradually, over the next decade, in three affordable steps.
“First, the Government should implement its plans of extending pension savings to the over 18s, and commence pension saving on each pound of savings, from the mid-2020s. Then around the end of the decade, pensions should be “levelled up” so that employers match employee contributions. This would mean 10 per cent of pay goes into pensions but would not require extra contributions by workers. Finally, when affordable, in the early 2030s, contributions should be increased to 12 per cent.”