One in eight people retiring in 2018 ‘have no private pension’

ONE in eight people retiring this year have no private pension savings, a study has revealed.

Some 12% of people planning to retire in 2018 have no private pension of their own, rising to nearly one in five (18%) women retiring this year, Prudential found.

Women retiring this year are more than twice as likely as men to have no private pension of their own to fall back on, the research suggests.

Among men retiring this year, 7% have no private pension, according to the survey of 1,000 people planning to retire in 2018.

One in 10 (10%) people said they will be totally or somewhat reliant on the state pension to fund their retirement, with others having some other form of savings.

Prudential said this could leave these people starting their retirement with an income of around £1,452 a year below the Joseph Rowntree Foundation’s minimum income standard for a single pensioner.

The poll, which asked people planning to retire in a given year about their finances, found the number of people retiring without any private pension is falling.

In 2017, 14% of people retiring in that year had no private pension and the proportion is now nearly half the 23% recorded in 2008.

The gap between men and women is also narrowing – in 2016, 22% of women had no private retirement savings compared with 7% of men.

The introduction of automatic enrolment into workplace pensions in 2012 has transformed the retirement savings culture, with around nine in 10 people staying in their pension rather than opting out.

Minimum contributions into workplace pensions are gradually being stepped up from next month, with a further increase in 2019.

Prudential said taking the JRF’s minimum income standard of £192.27 a week for a single pensioner – a benchmark of the income required to support an acceptable standard of living – those relying on the state pension will fall short of the minimum standard by £27.92 a week, or £1,452 a year.

On average, people expecting to retire this year estimate the state pension will account for around a third (33%) of their income in retirement, which is lower than the 35% recorded previously in recent years.

Stan Russell, retirement income expert at Prudential, said: “The long-term trend for the number of people retiring without a pension is down and that is good news.

“But there is still some distance to go and it is worrying so many people will be entirely reliant on the state pension for their income in retirement.

“While the state pension is an important part of retirement income, it shouldn’t be the only part and those still in work should if at all possible be contributing to a pension and saving towards their retirement.

“It is never too early to start saving into a pension and even a small amount each month can make a difference.”