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 198.

    193 Lindy.Lou

    "However, most public-sector employees are not rich and I wouldn't expect them to bail out the private sector."

    But you still don't get it...without the private sector...there is no Public Sector.

    You refer to rich public sector workers...define please.

    Why should a teacher obtain a pension of over half a million pounds ?

  • rate this

    Comment number 197.

    Re 176
    "were" being the operative verb.
    "Now" - public pay is 4% higher than the private sector - see ONS Labour Market stats. And the value of the benefit of the public sector pension has increased as life expectancy goes up and annuity rates come down
    The public sector pension benefit is now worth over 40% of salary, (1/60 / annuity rate)
    Private sector employer schemes are less than 10%

  • rate this

    Comment number 196.

    183.Lindy Louise

    My point was (to another poster) that you can't slate the private sec and then big up the public sec as the true wealth creators......its nonsense

    Reality is private sector create the taxes that provide for the public sector. The public sector provide the services that enable this to happen. Bit like perpetual motion....but with faults ;-)

  • rate this

    Comment number 195.

    Since Gordon Brown’s raid the value of pension funds has diminished to paltry levels. An ISA offers an arguably better option without committing capital.
    Bear in mind that the potential growth in the short (under 10 year) term of a pension, even allowing for the tax relief, is poor and arguably to invest in one would not be best advice.

  • rate this

    Comment number 194.

    The a reason why your bank account is so empty. Government.
    Simple as that.

    If u think you can invest your own money more wisely than No.10 (& judging by their efforts, it'd be hard to do worse), demand they stop taxing u. Demand they stop eroding your savings through BoE QE/inflation. They're robbing u blind, then when u die, they want more of your estate u paid tax on your whole life!

  • rate this

    Comment number 193.

    #185 Owlsoflaughter
    Nonsense -- of course rich public-sector employees should chip in! However, most public-sector employees are not rich and I wouldn't expect them to bail out the private sector (although of course the British public have done exactly that for inefficient banks).

  • 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 190.

    The ease of credit has made it too easy for the have now generation to build up crippling debt buying depreciating luxury goods which equals no money for pension. Why should the state ie taxpayers then support such individuals in their old age. Genuine poverty is a different matter, but that is why the state pension is about to be improved.

  • rate this

    Comment number 189.

    The problem is after both the pension provider has taken his cut, then the taxman (thanks to Gordon Brown's changes) has taken his cut its hard to get a return that's better than real inflation.
    Then you have to buy an annuity with 3/4 of it, and they are poor at present.
    Plus a lot of pensionsers with small pensions are no better off than those on means tested benefits.

  • rate this

    Comment number 188.

    Let me see! I have some money. What are my options?

    Option 1 - Put the heating on and eat today.
    Option 2 - Put that money into a scheme which may, or may not give me an adequate income in 20 years time but is guaranteed to feather the nest of a fund manager, regardless of performance.

    Unfortunately most of us are just about getting through today. Tomorrow will have to wait.

  • rate this

    Comment number 187.

    It's such a shame that so many think pension costs are excessive. They are but a low cost SIPP is the answer. I use Hargreaves Lansdown.

  • rate this

    Comment number 186.

    @ AAA 119. I think you will find that the people who work hardest are also among the poorest. There's no "or" in it. In corporate UK it's "work hard AND be poor," not "or."

    177. Nothing. I don't smoke, I don't drink, top up my (£12.50) mobile £5 every 2 years or so, don't go on holidays and don't eat fast food either. Because I can't afford any of those things. So hush now and back to Tory HQ.

  • rate this

    Comment number 185.

    160.Lindy Lousie

    "There's massive amounts of money in the private sector but low-paid private-sector workers are unable to save because they're too poor. We need a redistribution of wealth."

    Just so long as the public sector don't have to chip in ey Lindy ?

  • rate this

    Comment number 184.


  • rate this

    Comment number 183.

    #174 BadlyPackedKebab
    Wealth creators work in the public sector too: engineers, researchers, scientists. Their ideas are monetized in the private sector but, without them, those wealth-creating ideas wouldn't be available for the private sector to exploit. Please explain what a "5 a day outreach worker is".

  • rate this

    Comment number 182.

    Frankly, the plight of many people over 50 is so dire that sleepwalking into the future seems to be a relatively sensible way of proceeding. Through no fault of their own they have been mugged by banks, government and others, seen their savings diminish or not being able to save at all and seeing their kid struggling too. Better to sleepwalk than die from the stress of thinking about it.

  • rate this

    Comment number 181.

    I paid into a pension for many years only to be asked to pay more to keep my predicted benifits on track , it came to a point that my pension was contributions became more expensive than my mortgage. I have now frozen my pension to have it eaten up by management fees .

  • rate this

    Comment number 180.

    Lets end the immoral system funded by robbing Peter today to pay for Paul's contributions yesterday. It's a Ponzi Scheme!

    Forcing young workers to support a growing population of retirees is insanely immoral.

    Lets Phase Out the State Pension over 5 years, return people's incomes to their rightful owners, & Axe the immoral tax on our kids' backs!

  • rate this

    Comment number 179.

    --One question, how much of the Private sector really is real wealth creating

    It's easy Brangy. How much coporation tax do these companies pay and how much does the PubSec pay?.
    The public sector is wholly financed out of profits from the private sector. That in itself is not a bad thing but it must be regulated to prevent the PubSec workers grabbing more that a fair share!


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