Half of UK DC savers worry they can’t save enough for retirement, with concerns about pension contributions and retiring “with dignity,” while younger generations show strong interest in automated savings solutions, according to BlackRock’s UK Read on Retirement 2024.
It highlights generational differences and shared challenges among UK Defined Contribution savers, emphasising difficulties in staying on track for retirement, the need for better saving habits, and increased engagement with retirement planning.
According to the survey, nearly three-quarters or 74 per cent of respondents believe they will not be able to retire with a respectable standard of living, and confidence is at its lowest level since BlackRock started polling UK DC savers in 2017. Many respondents, around 52 per cent, are particularly concerned about the cost of living crisis.
Meanwhile, less than half or 45 per cent of UK DC savers think they are making adequate contributions, despite the fact that 80 per cent of participants think pensions are the best method to save for retirement. Around 76 per cent say they would appreciate the discipline and flexibility of automated “rainy day” savings.
BlackRock head of UK and Ireland institutional client business Gavin Lewis says: “As the first generation to save primarily through DC pension schemes approaches retirement, we found that many feel they are not on track to attain a reasonable standard of living in retirement (29 per cent). The next generation shares similar feelings, with 38 per cent concerned they won’t have enough to live the life they want, and 61 per cent concerned about outliving what they have built up.
“This sentiment demonstrates the need for an increase in individual pensions contributions and broader pensions innovation, such as target date funds or Collective Define Contribution schemes, both of which pay an income in retirement. In fact, 52 per cent of those surveyed ranked the certainty of an income as their highest preference for a pension.
“While Pre-Retirees are more concerned about their retirement future, the younger generations also need help to save now. Nest Insight’s research has shown repeatedly the power of payroll savings in helping people build long- and short-term financial security. With a large proportion of both Gen Z and Millennials having fewer than three months’ savings on which to fall back, building an emergency savings element into auto-enrolment is a ‘win-win’ in this context.”