Pension planning 'inadequate' among over 50s


NAPF's Mel Duffield: "People should be realistic about the pension they will need"

Many over 50s are "sleepwalking into their old age", a pensions group says, as research suggests people are over-optimistic about retirement income.

The National Association of Pension Funds (NAPF) said people must conduct a healthcheck of their workplace pension.

This view comes after an Institute for Fiscal Studies report said that people may live for longer than they expected.

The report suggested that people's pension provisions were inadequate compared with their expectations.

The report, which was partially funded by the NAPF, claimed that women were underestimating their life expectancy by four years, and men by two years.

It found that one in four people aged between 50 and 64 needed to save an additional £60,000 before retirement to gain the income that they might expect.

Nearly 60% said they had not thought about the number of years of retirement that they might need to finance.


About 32% of those aged 52 to 64 could not offer a rough estimate of what their private pension retirement income might be.

"Fortunately, people are going to live longer than they think, but they are not planning for it, so they might find their savings and pension do not stretch far enough," said Joanne Segars, chief executive of the NAPF.

"Millions of people are within a decade of their state pension but have still not thought about how long their retirement might last. It is worrying that so many over 50s are sleepwalking into their old age and are expecting to be better off than they will be."

She urged people to shop around for an annuity - a pension income for the rest of their life - which is bought with their pension pot.

"It does not help that the annuity market has become so tough," she added.

There has been a consistent fall in annuity rates since 2007.

Tom McPhail, head of pensions research at investment firm Hargreaves Lansdown, said: "Generally investors underestimate their life expectancy in retirement and, in order to receive the income they would like, investors need substantially more money in their pensions."

This meant better communication was needed to manage pension investors' expectations. They also needed to be encouraged to take better decisions about retirement saving earlier in their working lives, he added.


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  • rate this

    Comment number 356.

    Perhaps the stats are actually reassuring, and the article maybe makes a false opposition.

    Many people have rumbled the rip off pensions industry, and are making other plans, investing in property, bonds and anything else that stops their hard-earned money slipping from their grasp.

  • rate this

    Comment number 199.

    If you are within 10 yearsits already too late. The old pensions I took out 40 years ago remain the best. My advice if you have not got enough-- stay at work after 65 if you can. I have done that and have a hugely increased income despite deferring two pensions. Deferr the state pension for more than a year and you can get it all back as a lump sum, plus interest.

  • rate this

    Comment number 192.

    Never, ever trust pension funds.
    I've saved in my company scheme for over 35 years only to be told this week that they are - with immediate effect - cutting the return rates so my income in retirement will now be 27% less than anticipated. With 2 years left to go I have two choices - accept I will now be a lot poorer than promised or pospone my retirement and work another 5 years.

  • rate this

    Comment number 191.

    There is a huge problem ahead for those who do not plan.Do not rely on the state to bail you out.
    "My property is my pension",oh yeah try spending bricks at the supermarket.
    Do your own planning,pay off all debts ASAP,invest in ISA's SIPPS,and manage them yourself,you can do it with minimal fees.
    The tax break for contributions to a SIPP is enormously valuable,use it whilst you still can.

  • rate this

    Comment number 126.

    I've saved for a pension for 25 years. The money in the pots is equal to money I've put in almost exactly. Compound interest is a fantasy. Even with tax relief, money purchase pensions are really bad value.


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