According to a new survey the majority of workers in the UK arenโt aware of how much money they need to be able to retire comfortably.
A survey of more than 1,200 people by chartered financial planners True Bearing revealed that 83% of workers, including full-time, part-time and self-employed, donโt know what size pension pot they need to retire.
Furthermore, 42% of employees admitted to being unknowledgeable on pensions, while a further 38% said they were neither knowledgeable nor unknowledgeable. Just 14% of respondents said they were knowledgeable about pensions, with 2% considering themselves as very knowledgeable.
George Critchley, Chairman at True Bearing, said: โWhen a worker retires and is no longer getting a regular wage, they need to replace the income their employer used to provide them. Determining how much of their income they need to replace is key, especially as most peopleโs spending changes in retirement.
โUnderestimating the amount of income workersโ need to replace in retirement could be devastating to their long-term security, and they could find themselves struggling as a retiree. Pensions were only ever meant to pay out for 10-15 years. Today, many of us are expecting to live many years beyond our retirement, which needs to be considered when thinking about what size of pension pot is needed.
โAs a rough guide, workers should be aiming for between 12-15% of their salary for 40 years.โ
To encourage employees to start building up retirement savings, the government introduced pension reforms through the Pensions Act 2008, which requires all employers to offer workplace pensions schemes and to automatically enrol eligible workers into their schemes. Automatic enrolment is designed to help workers build up their retirement fund without having to take any actions themselves.
The survey findings revealed that 86% of workers have a workplace pension, with almost half of employers (49%) paying above the minimum 3% contribution. Surprisingly, 22% of employees with a workplace pension are not aware of how much their employer puts into their fund.
When considering different genders, male employees (53%) were more likely to receive above the minimum contribution from their employers into their workplace pensions than female employees (43%).
When respondents were asked whether their employer offers pre-retirement advice, 29% responded โyesโ, while 36% said they didnโt. Some 35% said they did not know whether their employer-provided pre-retirement advice. The survey found that most employers offer advice on pension benefits (64%), followed by options for retirement (62%) and how the recruitment process will work (61%).
Employers were least likely to offer advice on estate planning (11%), alongside new opportunities (16%) and maintaining a physical and mentally healthy lifestyle in retirement (21%).
