Pension schemes are a poor way to
save for retirement. At least that’s what the majority of workers
in the UK believe, according to a study conducted by the Institute
of Financial Planning (IFP).
Across a broad spectrum of workers
aged 18 to 55 and above, the IFP found that a mere 29% of people
have confidence that contributing to a pension scheme is the best
way to save for their retirement.
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Women are the most sceptical with
only 23% having confidence in pension schemes. Among men, 36% have
confidence in pension schemes.
Commenting, IFP CEO Nick Cann said:
“We can sit back and continue to be concerned about today’s
findings, or we can call on the government to make planning for
retirement more relevant and interesting for today’s society.”
He added that people are clearly
nervous about committing to long-term savings with no access to any
of the capital that is being built up.
A low level of confidence in
pension savings comes against an illuminating assessment of
retirement prospects by LV=. According to a study by the life
insurer, 28% of workers (6.1m) over the age of 50 expect to work
past the current state retirement age.
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By GlobalDataSpecifically, LV=’s study found
that, on average, those planning to work past state retirement age
will work for an extra six years, which could see them retiring at
71 for men and 66 for women based the current state retirement
age.
One in five over-50s said they
expect to work for at least a decade past the current state
retirement age. In 2018 the state retirement age will increase to
65 for women and in 2020 to 66 for men and women.
LV= found that the main reason
people over 50 intend to work beyond the state retirement age is
financial, with 51% citing this as their reason.
A further 11% intend to delay
retirement in the hope that the value of their pension will
increase.
Adding pressure to the ability of
workers in the UK to save are incomes that on average are declining
in real terms. According to the Office of National Statistics
(ONS), in September this year total income of the 24.8m people
employed increased by 2.3% compared with a year earlier. This was
down from an increase of 2.8% in August.
If the impact of inflation which
the ONS reported was at 5.2% in September (up from 4.5% in August)
is taken into account, real income fell by 2.9% compared with a
year earlier.
According to UK retailer Asda, the
weekly disposable income of the average British family fell by £15
($23) in September 2011 to £163. This was 8.4% down from the level
recorded by Asda in September 2010.
The latest Asda Income Tracker has revealed that family spending
power fell by £15 a week in September 2011 – the third consecutive
month of record breaking decline. The squeeze left the average UK
family with £163 of weekly disposable income – 8.4% down from this
time last year.
