Pension lessons learnt by those reaching retirement have been highlighted in new research from Friends Life. New research conducted by the pension provider among over 50s still in work has revealed that only a quarter (25%) felt that they contributed enough to their pensions through their 20s, 30s and 40s to be able to afford a comfortable retirement.
Over one third (35%) of the over 50s surveyed don’t feel they contributed enough to ensure a comfortable retirement, but they felt that realistically they couldn’t have done anything differently in early life to change this prospect.
Interestingly, two thirds (62%) have never increased their pension contributions, leaving their pension pots on a ‘slow burn’ throughout their working life. Of those who have made adjustments 56 per cent have only increased their contribution by up to five per cent. When it comes to the gender divide, over two thirds (68%) of women have never proactively increased the percentage of their salary contribution, whereas half of men (53%) have never done so.
There is however a small number, 12 per cent, of those within the 50 plus age group surveyed who plan to increase their contributions as they approach retirement by an average of nine per cent.
A country divided
The new research also considered how proactive pension contribution increases vary across the country. Whilst London may be considered the most switched on when it comes to financial matters, it is in fact those in the East Midlands who made the largest increases. The average proactive pension increase in the East Midlands is 15%, against a national average of eight per cent. East Anglia made the smallest increase in contributions and came bottom of the table with an average proactive increase of just six per cent. London, the North East, North West and West Midlands were all in line with the national average of an eight per cent increase.
Colin Williams, Managing Director, Corporate Benefits at Friends Life comments:”Difficulty in finding money to start contributing to a pension earlier in working life is not a new problem. Our latest research found that just 25 per cent of over 50s still in work believe they did enough in their 20s, 30s and 40s to provide a comfortable retirement with 40 per cent saying they should have started saving earlier. Auto-enrolment should help make this possible, by enabling more workers to start saving for the first time and easing the burden for those on lower incomes via a low starting rate for contributions.
“Our message to those who missed saving earlier in their careers is that there’s still time to make a difference. At 50 years old many workers still have 15 or more years left to work, and increasing contribution levels at this age could make a significant impact on the size of their pension pot. Keeping track of pensions built up throughout their working career will also help workers understand their collective pension position, and using tools and forecasters they can make informed changes to their contributions to help increase their final pot size to better meet retirement needs.”
