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 318.

    No sleepwalking - ust read up abou the pension industry and th enews stories and nobody would bother! The private sector people need to be able to oin the public sector pension scheme, then everybody would have a DECENT pension. It would be paid for by the people currently working, but personally I'm prepared to take a slightly smaller income for a really GOOD protecting pension.

  • rate this
    +6

    Comment number 317.

    I have a plan for retirement: live in poverty.

  • rate this
    +8

    Comment number 316.

    I'm 55 and worked in the private sector all my working life.
    Everyone knew the deal, work in the Public Sector earn much less now but have much better benefits or work in the Private Sector earn"Loads of Money" but with very few benefits private sector workers cannot have their cake and eat it. Public Sector workers deserve their pension for taking less for years.

  • rate this
    +5

    Comment number 315.

    More money from normal peoples pockets for wealthy bankers to waste... and still be rewarded in THEIR work and retirement. This country treats its people like mugs and this government allows it. What an excuse of a nation we have

  • rate this
    +5

    Comment number 314.

    A big issue is that a lot of pension advisers and companies use jargon to deliberately confuse people into just agreeing to whattever as it is too overwhelming which is against the FSA principle of plain English marketing. I'm an accountant in an insurance company and I was struggling to understand the product as they described it. How is the average person supposed to understand?

  • Comment number 313.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +1

    Comment number 312.

    how can the average working man/woman with a family save anything in the uk?, high housing costs, high taxation, high fuel and travel costs, we would all love the idea of maybe one day having something, priorities, government tells us we must save for old age, no, i choose to give my family a life, government has been hard on 60s people, milked us dry, now they see a future problem and we must pay

  • rate this
    0

    Comment number 311.

    Whether additional private pensions are sufficient depends on the rate of the state pension & that is a political decision. Right now all our assets are being devalued by the liberal printing of money. If any of our assets (inc pensions) survive the present robbery remains to be seen. You can only every be sure of the state pension. If the state goes bust it won't let pensioners starve to death.

  • rate this
    +6

    Comment number 310.

    "308.newageoracle

    ...Socialists created a culture of dependence on state benefits."

    No they didn't. Closing the factories and other workplaces created 'a culture of dependence on state benefits' - out of necessity, not desire. Blame who you like, but employers, or lack of, are the cause of unemployment, not the unemployed. .

  • rate this
    +2

    Comment number 309.

    Before I put another voluntary penny into a 'proper' pension, I want a cast iron guarantee that no future government will use the existence of those savings to deny me state benefits such as the basic pension.

  • rate this
    +1

    Comment number 308.

    The UK abandoned the commendable principles underlying Beveridge's Welfare state decades ago. Instead of providing a safety net for people who hit hard times...Socialists created a culture of dependence on state benefits. In the UK, those whose self respect rejects the dead hand of this "welfare" doctrine, work hard and save for the future will always be ripped off to fund the irresponsible.

  • rate this
    +4

    Comment number 307.

    Governments over the years have successively stolen pension money, and allowed asset strippers to steal off workers. The present government has introduced yet another pension scheme, which they promise not to steal this time, but they keep telling us the retirement age will go up, so when, if ever will I get this pension? 65, 70, 75? It sounds like another scheme to steal my money.

  • rate this
    +2

    Comment number 306.

    Wonder how many people are relying on/ will be forced to rely on their property values to see them through retirement, and how that will pan out.

  • rate this
    +1

    Comment number 305.

    "Public-sector employees organised, unionised and fought for fairer pay and conditions; they achieved better pension provision by fighting for it. Private-sector workers need to do the same"
    No No No, you don't get it do you? The public sector pensions are payed for by all tax payers. In most cases the amount paid out as a pension bears little relation to what you actually paid in.

  • rate this
    +8

    Comment number 304.

    It's not lack of planning, it's the facts of life. Only a few lucky people have a pension good enough to retire on.
    I've always worked, I've almost always had a private pension scheme in place, and I now have several pensions from different firms I've worked for, none of which will be anywhere near enough to live on when I reach retirement age in less than 10 years.
    Retire? Some hope!

  • Comment number 303.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +5

    Comment number 302.

    Yet again, those that have saved and have carefully lived within their means will be expected, (looking at these posts ARE BEING EXPECTED), to pay the credit card bills of those who run pension funds and the city.

  • rate this
    +1

    Comment number 301.

    Public Sector Workers -- See
    See http://www.ft.com/personal-finance/annuity-table

    So a 60 year old Female needs £100k pot to have a index linked pension of £2,750 /annum
    So your £27k pension would cost £1M, not that you or your employer has that money but it will taken from the had working people who did save maybe a quarter of that. ( 50% of a Advanced Teachers, not leadership, salary)

  • rate this
    0

    Comment number 300.

    Lindy Louise
    A well run compny doesn't need it's leader micro-managing. A good leader sets the course and then lets the crew to their stuff.

    Anyway back on topic, For a tracker you should pay 0.5% mgmt fee, you would struggly to do this in a SIPP for less. If you want someone to invest your money you need to pay them. Does a teacher turn up to teach our children for free?

  • rate this
    +1

    Comment number 299.

    I personally expect to be at work until I drop dead at whatever age that may be. Not because of the fact that I dont have a private pension which I have regularly contributed to but simply because the pension I have is apparently not worth a light.

 

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