Research published by the PLSA in September 2021 revealed that many people do not yet know the basic elements of pension saving, such as how much the State Pension is worth and how much they need to save.
In addition, the survey found that over half (56%) of savers with a pension are worried they are not saving enough for retirement, while 21% are confident they are saving enough to fund the lifestyle they want when they stop working.
From the survey data, the PLSA identified five key messages that it believes all savers should know to help them better understand their pensions and dispel some of the myths about retirement saving:
The research found that the majority of the public (78%) do not know how much the full State Pension is. And yet, when asked if savers plan to rely on the State Pension in retirement, just over a third (36%) said that they expect to rely on it as their main source of income, especially those aged between 55 and 64 (49%). However, 18% said that they remain unsure what they will rely on in retirement.
Auto-enrolment has resulted in more than 10 million additional people saving into a workplace pension. However, while it has been a success, a quarter of those surveyed stated that they still do not have a pension, while 5% don’t know if they have a pension or not. Concerningly, one in five non-retirees say they are currently not paying into any pension.
Based on in-depth research with the British public, the PLSA produced its Retirement Living Standards to help savers picture their future life in retirement at three different levels of expenditure: Minimum, Moderate and Comfortable.
42% of non-retirees surveyed believe they will be able to achieve a minimum lifestyle according to the Retirement Living Standards, while more than a quarter (28%) believe they will be able to achieve a moderate lifestyle. Just one in six (16%) believe they will achieve a comfortable lifestyle.
The survey found that people from older age groups are more likely to believe they will achieve a basic or moderate lifestyle than the younger age groups: 71% of 65+ year olds believe a minimum level is achievable, 40% believe a moderate lifestyle is achievable, while one in seven (14%) believe a comfortable level is achievable. In contrast, only 40% of 18-34 year olds believe a minimum level is achievable and 32% think a moderate level is achievable, while 23% believe a comfortable level is achievable.
The news that a choice was required came as a shock to a number of those surveyed, with a third of non-retirees saying they did not know they will have to make a choice as to how they want to take their benefits from a range of different options.
Furthermore, just over a quarter said they know they need to choose and fully understand their options (29%), while two in five (39%) said they know they need to choose a retirement option, but don’t fully understand them.
Encouragingly, most non-retirees surveyed said they would get advice when it comes to making their pension income decisions (93%), with half saying they will go to Pension Wise. 33% said they will go to a financial adviser, while around a quarter will go to another government/consumer website (27%), a pension scheme (26%) or a private sector money advice website (24%), for example Moneysaving expert.com or Which?.
Finally, almost one in five say they will go to their employer (17%), while a third (31%) say they will get advice from family or a friend.