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.

'Worrying'

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
    +3

    Comment number 218.

    212.Muumipeikko
    Lindy Louise,
    Let me guess, your not a rich public sector worker.

    Such a foolish rant.
    The average public sector full time pay is a bit higher because many pubic sector workers still bother to join unions to protect themselves.
    Private sector pay is driven down by unscrupulous employers.
    Are you really in favour of eveyone earning less - who does that really help?

  • rate this
    -1

    Comment number 217.

    A Private pension is:

    Good for the City of London
    Good for the Government

    They both do well from a private pension

    The private pension holder however only gets any remaining crumbs and loses state benefits at the same time

    Unless you have a CEO pension of millions a private pension is a complete waste of space

    You'll be FAR better off buying a Taxi with the cash

  • rate this
    +5

    Comment number 216.

    I totally agree with Pogo!
    I too have saved in a pension for years, only to see my pension "pot" eroded by high fees, poor investment returns and finally poor annuity rates.

    My advice, don't bother with a pension, save into a high interest ISA savings account and avoid being ripped off by the pensions industry!

  • rate this
    +1

    Comment number 215.

    Build retirement income with what? Many older people just keep on working because of necessity. Do you not think they are scared...and maybe just a little bit angry?
    The govt has created yet another problem; it is the Govt that has not planned for the baby-boom onslaught. What will it do with elderly poor - step over them on the streets?

  • rate this
    +2

    Comment number 214.

    #198 Owlsof laughter
    By rich public-sector workers I mean council leaders, some doctors, some judges, university vice-chancellors, Director-General of the BBC -- those public-sector employees who earn very high salaries. And I do get it, I'm not an idiot, I know there would be no public sector if there were no private sector to support it. I've worked as a wealth-creator in both sectors.

  • rate this
    +4

    Comment number 213.

    I'm planning on going to jail. The conditions are far, far better than any OAP home, so I'm not giving the banks any of my money to waste!

    Seriously pensions are a waste of money. Put your money in other ventures, ISA's , properties and even shares give better returns than pension funds which often lose money!.

  • rate this
    +1

    Comment number 212.

    Lindy Louise,
    Let me guess, your not a rich public sector worker.
    In every survey it's the same result, the average public sector salary is higher have the private. Sure, you don't earn couple of 100k but neither does 99% of private sector. I bet you don't earn min wage either which a lot of private sector people.
    Paying more is always someone elses job, never yours...

  • rate this
    -2

    Comment number 211.

    I'm fed up paying for other people's benefits, their kids, their 3 star luxury accomodation as a consequence of breaking the law and all the rest.
    I can't fund a pension because my taxes are so high paying for everyone else. When I'm too old to work, everyone else can pay for me for a change. If you don't like it, give me back what I've paid for everyone else and I'll make my own provisions

  • rate this
    -2

    Comment number 210.

    Although I agree the direction of this report it is the lack of undertsanding of peoples finances are an issue in the UK. We as IFAs of 20+ years deal with this every day & education is the key to success. #126 is clearly wrong and his comments highlight the lack of understanding. Regular reviews are everything and work. Ignore your future plans at your peril

  • rate this
    +4

    Comment number 209.

    Pensions are nothing more than a legalised, Govt sponsored, gambling con . . . designed to fund the financial services industry! In the future any OAP with any sense will have left this country by the time pension time comes round, . . . and be living off the income from renting their house out to the next generation of mugs!

  • rate this
    +1

    Comment number 208.

    Many people seem to be assuming that equity in their properties will fund their retirement. But TO WHOM are they expecting to sell when down-sizing, and HOW MUCH do they expect to realise? Young people are very hard up compared to older generations, and the average age of first-time buyers has risen to 37. Property prices are only heading one way.

  • rate this
    +3

    Comment number 207.

    Comment 96 is spot on. What is the incentive to save whilst you are being taken for a ride supporting those who are unwilling to show self control in their spending ? Maybe all us savers should queue outside all the banks one day, demand our money and bring the country to the brink of multiple Northern Rocks. Only then might those whose policies have destroyed savings may listen.

  • rate this
    +3

    Comment number 206.

    #198 Owlsoflaughter
    I do get it. I'm a teacher who can take her pension next year. Sadly it's worth only a fraction of the half a million you suggest because: I wasn't one of the bosses of a large secondary school earning a high salary; I didn't do the job for 40 years. I've never met a teacher with a half million pension pot. I'm beginning to think you believe what you read in the papers!

  • rate this
    0

    Comment number 205.

    Why UK pensions to overseas from Newcastle to CITIBANK Ireland the UK goverment used our taxes to bail Britbanks.how come UKPS use Citibank "on contract"waiting 4 months for a payment because UKPS cant cooperate internally within. Each time remit is returned it cost tax payer 50 quid. Goverment need to reform inside as tax payers get ripped off time and time again

  • rate this
    +4

    Comment number 204.

    198 Owls
    I suspect you also don't get it this pribvate/public sector split is arbitary and changes depending on the system. Explain to me why the Police, Teachers, Doctors, Social Workers add less value than accountants, lawyers, retailers etc. And don't rely on financial definitions
    The fundamentalist free marketeers forget that these things are much cheaper when run collectively for no profit

  • rate this
    +1

    Comment number 203.

    Everyone over 50 knows that the government and financial sector will steal any small pension provision an individual has

    The private sector has a system where private sector pension charges will steadily eat away at your money like an incurable cancer

    A small pension can also have a seriously detrimental effect on your entitlement to any benefits

    So why bother trying

  • rate this
    +3

    Comment number 202.

    The pension fund managers or "investors" as they like to be known are the ones who condone the excessive salaries paid to CEO's despite poor dividend returns, are in bed with the city and have watched our pension pots reduce as they and their accomplices do very nicely indeed. Pensions are a waste of time and only feed the city mouths.

  • rate this
    +7

    Comment number 201.

    What we really need is something like a cash pension ISA that can't be touched until you are 55 but doesn't count as savings if you are unemployed or sick.
    A friend of mine saved for old age by putting money in a cash ISA and when she got cancer and couldn't work and was forced to use the money as she could not get means tested benefits.

  • rate this
    +9

    Comment number 200.

    I've been saving for my pension for 25 yrs & regularly increasing contributions as salary permitted.

    Unfortunately, it still hasn't recovered from the massive kicking it received courtesy the 'Casino Bankers' who all have huge pension funds.

    Sadly my retirement income might end up the same as those whom didn't save though, since I suspect the state pension will be means tested in the future.

  • rate this
    +2

    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.

 

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