The introduction of auto-enrolment has boosted the pension savings sector in the UK, but a recent study has flagged a problem in private retirement pots.
More than a fifth (22%) or 1.6 million Brits aged 55-64 still have no private pension wealth, according to analysis of Office for National Statistics (ONS) data by retirement product provider Just Group.
The figures revealed a “worrying hole” in the nation’s preparations for later life; as 40% of the 4.5 million Brits aged 55-64, who have not started taking pension benefits, have zero private pension wealth.
Increase savings level
“We know the UK, as a whole, is chronically under-saving,” Andrew Tully, technical director at Canada Life, told International Adviser.
“Through auto-enrolment a new generation has been introduced to saving for the first time, but even then savings levels are too low to provide a decent standard of living in retirement.
“Future generations will not be able to rely on defined benefit pensions, while their parents may use wealth to pay for long-term care, so relying on inheritance may not be the best financial plan.
“We need to increase savings levels through auto-enrolment and encourage people to think about their broader wealth when considering their retirement plans, specifically property wealth, to bridge any gaps.”
Just Group’s analysis also found women aged 55-64 (28%) are more likely to be without private pensions than men (16%).
Tom Selby, senior analyst at AJ Bell, said: “The gap in pensions between men and women has been well documented, resulting primarily from differing work patterns and salaries.
“The simplest way to address this would be to close the wage gap between the sexes, but in reality this will take years.
“The government therefore needs to prioritise supporting women of all ages to save for retirement, as well as assessing whether the support offered by the state is sufficient.”