• A staggering 64% of people in-work aged 45+ have no idea how much they need to save

• Roughly 5 Million workers – 37% – are unaware how much they’ve already saved for their retirement

• Workers aged 45 with an annual average wage of £28,000, still have time to save up £56,100 through their employer’s auto-enrolment pension scheme 

 Research carried out by pension firm Aviva states that tow out of three workers aged 45 and over have not prepared for their retirement and a third don’t know how much they’ve saved already.

 Almost 50% are unsure how much state pension they have built up yet this will be the backbone of many people’s retirement funds through the guaranteed weekly income from the Government.

According to pension provider Aviva, it is not too late for the millions of middle-aged workers who are sleep-walking towards old age, to put their finances straight.

 It has worked out how much you can still save up even if you start late, under auto-enrolment rules. If you are 45 and on an average annual wage of £28,000, you have time to save up £56,100 before you are 65. That includes your own contributions, plus free top-ups from employers and the Government, and investment growth which all compound over the years.

 Aviva says its research shows that many people are “flying-blind” towards retirement finding that:

 Some 64 per cent of workers aged 45 and over—the equivalent of nearly nine million people —do not know how much they will need to save to retire on a comfortable income, and 37 per cent – roughly five million middle-aged employees do not know how much they have already saved into pensions. Two in five, or 43 per cent, of those surveyed do not know how much state pension they have built up through National Insurance contributions, and 26 per cent do not know what age they need to reach to start drawing the state pension, which is currently worth £168.80 a week or just under £8,800 a year). Some 37 per cent of employees aged 45-plus do not know what type of work pension they have – meaning whether it’s a defined contribution or defined benefit scheme (see below*). Surveying more than 2,000 workers aged 45+ and conducting research among more than 1,000 employers at the start of 2019, Aviva’s results are in tune with previous research showing that knowledge about saving for one’s retirement is “woeful” across the generations.

Eye-opening statements culled from focus groups reveal that understanding of how pensions work is poor, levels of mistrust and alienation are high, and many people plan to rely on their homes to fund retirement. Many people are mystified by all the jargon surrounding pensions and feel overawed when faced with the new pension freedoms available to over-55s to spend, save and invest their retirement “pot”. Can you relate to the findings from the survey and

• Are unsure of the current size of your retirement pot and how your contributions will help boost this
• Are unaware how much you need to have saved for a comfortable retirement
• Or have a number of different pensions accrued over time with different employers
• Would like a better understanding of how your work/ personal pension sits with the State Pension
• Don’t know  how the new Employers Auto-enrolment pension fits with your own arrangements

Contact Markland Hill Wealth for an independent free review of your later life planning. We will carry out a thorough review of your current arrangements including any personal pension plans, employers’ schemes, auto-enrolment pension and your State Pension entitlements.

 We’ll research the whole of the market to find a product that reflects your current financial circumstances and lifestyle. Get in touch through www.marklandhill.com with the subject ‘Later Life Review’ and we will contact you in the near future to assist you further.

*What are defined benefit and defined contribution pensions?
Generous gold-plated defined benefit – or final salary – pensions provide a guaranteed income after retirement until you die.  Most private sector employers have now replaced them with stingier and riskier defined contribution pensions.These take contributions from both employer and employee and invest them to provide a pot of money at retirement, but the worker bears all the investment risk.

Author: Tanya Jefferies  Link to full article