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Four in five approaching retirement uncertain about value of pension savings

16 December 2015

Half of people (49 per cent) are worried that they will not have enough pension savings to be comfortable in retirement, new analysis from Citizens Advice reveals.

In research out today the national charity finds that over half (59 per cent) of people over 50 say that a key hope for their retirement is to have enough income to support the lifestyle they want, with many also wishing to take holiday, travel and stay active. Yet a quarter (24 per cent) are afraid of their pension savings running out.

The new report Approaching retirement finds many people are unaware if their pensions savings will be enough to fund the life they hope to have and identifies the barriers which stand in the way of people getting to grips with their pensions.

The study finds only one in five (22 per cent) are confident they know the exact value of their pension pot. Of those who do not know the value of their pension:

  • 18 per cent have lots of small pots and do not know how to calculate their combined value.

  • One in five (21 per cent) believe that their pot is too small to be worth looking into its value.

  • One in seven (15 per cent) don’t want to think about their pension as they don’t want to think about their retirement.

  • 18 per cent do not know how to find out more about their pension.

Based on a survey of almost 1,400 UK people over 50 and in depth interviews with people aged 50 - 65 with DC pensions which they had not yet accessed, the Citizens Advice research identifies three barriers which stop people getting to the bottom of what their pension is worth.

Fear of the unknown: People worry that planning now could result in wasted effort if circumstances, such as the economy, changes in their personal lives or amendments to pensions policy happen before they start withdrawing their pension.   

Multiple income streams:  Three quarters (74 per cent) expect to rely on at least one non-pension income stream in their retirement. This can make it more  difficult to work out how much they will get, as the value of non-pension incomes like the sale of a house or business can fluctuate.  

It is on the ‘to do list’: Reviewing their pension was something they need to do or have on their ‘to do’ list but that they hadn't got around to doing so yet.

As well as identifying the gap between people’s hopes for later life and their understanding of their pension savings the reportalso looks at the triggers which start people saving for their retirement or encourage them to increase pension contributions.

The report highlights the introduction of auto-enrolment as an important measure to help more people save but adds that it alone will be unlikely to get pension saving levels to where they need to be in the long run.

Stronger triggers such as automatically increasing pension contributions when people change job or get a pay rise are needed to support greater saving rates, along with action to tackle minimal pension saving rates among self-employed people and those on a lower income.

Chief Executive of Citizens Advice Gillian Guy said:

“People know what they want from retirement but not whether they can afford it.

“At the end of their working life a person’s key hope is to have the income they need to support the lifestyle they want. Yet many are in the dark about whether they are saving enough to be comfortable.

“The recent pension freedoms offer consumers more choice but people must be encouraged to explore their options and start thinking earlier in life about how they will fund the retirement they wish for. The introduction of Pension Wise guidance will help many people get to grips with their pension options and the outcome of Financial Advice Markets Review should be that it is easier for people to be able to also access independent financial advice when they need it.”

Notes to editors

  1. 49 per cent figure from ONS Wealth and Assets survey, combining figures for people who are "not very confident" to the "not at all confident" about having enough income in retirement to be comfortable.
  2. All other figures from ComRes survey of 1,386 UK adults aged 50 or over who are not yet retired conducted between 14 and 28 August 2015. This was comprised of a nationally representative sample of 1,000 UK adults in this age bracket, plus a boost of an additional 350 people with DC pensions. In total 572 respondents had DC savings and had not yet started accessing them.
  3. Approaching retirement  is the first of three major reports by Citizens Advice seeking to understand how consumers think about and experience the pension freedoms in the context of their broader lives. The second and third report, on drawing a pensions and life after pension choices, will be published in 2016.
  4. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  5. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  6. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
  7. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
  8. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
  9. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.