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 358.

    The main problem is the historic low annuity rates offered for the past few years, due to the value of the assets held by the annuity providers plummeting in value due to the economic crisis. If things pick up in a few years, delay taking your annuity until then. Many are taking the other option of blowing the cash and then letting the benefits system boost their income.

  • rate this

    Comment number 357.

    Gordon's raid on pensions and continued scandals of high charges and poor performance together with his 'minimum pension' guarantee, mean that for many people it is just not worth saving in a pension scheme. In fact many financial advisers find themselves unable to recommend an average earner to take out a pension. My recently cashed personal pension allows a very poor pension annuity.

  • 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 355.

    As 50+ I have already lost one pension when an employer went bust and another pension investment where the manger charged more fees and used up all the investment. No 50+ should invest in a pension because they contain a clause that says that you may get back less than you put in. Pensions must be ring-fenced. If you can protect bank deposits you can protect pensions.

  • rate this

    Comment number 354.

    348. hywel-london
    This generation who are in their 50s now rode a huge house price boom, benefitted from Maggie’s right to buy...
    Some of us did not go to 'Uni' (very selective in those days), lived in squalor when Tebbit forced us to 'get on our bikes', lived in a single room until we were 25, and ended up on higher rate tax paying for your school and healthcare. Please don't tar us all

  • rate this

    Comment number 353.

    How about a tax on blame?

    Let's tax all those who think it's someone else's fault that they didn't save when they might have done, that the act of paying into a pension is what mattered (regardless of the amount), and that everything would be hunky dory if it weren't for private companies making a profit.

    Alternatively, they could always accept that there is such a thing as plain bad luck.

  • rate this

    Comment number 352.

    This is shocking - a future of nation-wide poverty awaits us.

    But is it surprising when the government has been sleep-walking for years into debt? Will people act rationally when fiscal irresponsibility seems embedded in electoral politics?

    "Play now, pay later" is a motto at the root of the whole of society, not just among the over-50s.

  • rate this

    Comment number 351.

    A survey on behalf of pension funds finds that people should pay more into their pension funds.

    I am slightly less than surprised at that.

  • rate this

    Comment number 350.

    I work in the NHS (mental health). I've watch a whole generation of my colleagues in their 50s retiring on very favourable pensions. Now conditions have changed for younger workers. We we will have to work longer & pay in more. It is ultimately my kids generation that will have to pay the debt incurred by this indulged older generation as their tax-payer funded pension seems to be sacrosanct

  • rate this

    Comment number 349.

    I'm over 50; I've always lived within my means and saved what I could. However, all these savings are needed to cover the cost of surviving these days. How am I supposed to plan for retirement when I can't get a job? I'm even thinking of investing my last savings on yet another qualification - but which one will guarantee me a job at the end?

  • rate this

    Comment number 348.

    This generation who are in their 50s now rode a huge house price boom, benefitted from Maggie’s right to buy, Privatisation windfalls in the 80s, building society/mutual fund free payouts (when they converted to banks), had free education to degree level AND many have generous final salary pensions.,..they should be the best prepared generation. Those below 50 will have it a lot tougher.

  • rate this

    Comment number 347.

    Private enterprise has been an ideological goal for so long now, but supposing there are areas where the private sector is not actually the best option? Supposing having to have huge numbers of financials experts in every little company creates such horrendous fees it's better to reduce the number of providers? How about sometimes private is best, sometimes pubic is best? A non-partisan approach?

  • rate this

    Comment number 346.

    How can you plan for your pension when goverments change the
    rules without giving enough time to adjust pension plans. Half a million of women over 50 have been deprived of their pensions only a few years before reaching retirerment age. Half a million left in the cold for more winters to come.

  • rate this

    Comment number 345.


    Public sector pensions are a mix- it depends on the scheme;

    A few of them (eg University) are managed as pension funds so what you and your employer pay in is invested etc and ultimately returned to you at 65.

    But a lot of them (eg NHS, police) simply payout to todays retirees with money collected from todays staff, and any shortfall is made up by the taxpayer.

  • Comment number 344.

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

  • rate this

    Comment number 343.

    The story doesn't take into account lots of people who have forsaken the "pension" route to retirement for other more risky but rewarding investments.

    Why invest in a sector that is doing badly, has a history of underperformance and is about as transparent as a brick wall.

    not necessarily the best but many are putting into property to hope for better returns.

  • rate this

    Comment number 342.

    How non defined pension schemes work. You start off with one company, its gets taken over numerous times, the government alters the terms and conditions you originally signed up for, the government will NEVER let you touch YOUR capital, should you not buy an annuity they will tell YOU how much you can draw annually, if you die without an annuity the government takes 40% of the fund. Its a con.

  • rate this

    Comment number 341.

    1. It would be nice if people only commented about public sector pensions if they actually knew 100% what they were talking about.....I haven't seen any evidence of that as yet.

    2. For those that think jobs like teaching are so cushy and well feathered in retirement.....why didn't you join the profession? There has been a teacher shortage most years since 1968.

  • rate this

    Comment number 340.

    The government's 'new' automatic pension scheme has been deferred till 2018, Who's to say it won't be deferred indefinitely? Private pensions are a poor investment. The old final salary pensions were the only ones which made sense. Companies betrayed their employees when they scrapped them with the encouragement of government.

  • rate this

    Comment number 339.

    If you're in your 50s and don't already have a solid private pension plan then it's already too late for you. You need to organise that when you're in your 20s but who do you trust with your money.
    So many private plans have let people down with poor returns.
    Why not let people add to their state entitlement by paying in extra to the state pension when they can afford it and getting it back later.


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