Retirement Savings Overview - UK - June 2010
- The UK has an ageing population and a worryingly large pension savings gap due to an apathetic attitude towards retirement, particularly amongst younger adults, who have other priorities like getting onto the housing ladder and who generally regard retirement as being too far away for them to worry about.
- The closure of final-salary pension schemes in the private sector has further exacerbated the situation, as the defined contribution schemes that have replaced them are typically less generous.
- In response to the widespread lack of adequate retirement saving, the government is launching an auto-enrolment national pension scheme called the National Employment Savings Trust (NEST) in 2012, which will help the situation and should significantly increase levels of pension participation.
- New individual personal and stakeholder pension APE premiums fell by 25% in 2009, from £1.71 billion in 2008 to £1.29 billion last year, due to higher unemployment, a rise in business failures, and squeezed disposable incomes putting downward pressure on savings activity.
- The majority of UK consumers are ill prepared for retirement – less than two fifths of non-retired adults have a pension and only a fifth have stock market-based investments.
- High earners, particularly those earning £40,000+, are considerably more likely to have a pension, with ownership levels at over two thirds of individuals.
- The majority of non-retired people are fairly optimistic about their expected lifestyle during retirement, with a third of individuals thinking they should be able to get by and a fifth expecting a comfortable standard of living when they retire.
- Young adults are more likely to say they’d rather live for today than worry about the future (around a third of 18-34-year-olds) and are much more concerned about getting onto or moving up the housing ladder rather than saving for retirement, which is understandable given the difficulties in the housing market at present.
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