Employer based pension schemes are considered as the ‘safest’ way to save for retirement and confidence in them is increasing, according to figures from the Office for National Statistics
Rising confidence in workplace pensions has seen 40 per cent of individuals surveyed seeing them as the “safest” option in the period July 2012 to June 2014, up from 35 per cent in the period July 2010 to June 2012, and 37 per cent in the period July 2008 to June 2010.
Awareness of workplace pension reforms increased substantially over the period July 2012 to June 2014. In quarter July to September 2012, 40 per cent of those asked said they had not heard of the reforms, compared to just 8 per cent in the period April to June 2014.
Investment in property is increasingly seen as a safe way to save for retirement – second only to an employer based pension – and is regarded as the most likely method to “make the most of your money”. The ONS found 42 per cent saw property as most profitable in the April to June 2014 quarter, compared to 40 per cent in the period July 2010 to June 2012 and just 32 per cent in the period July 2008 to June 2010.
People are expecting to retire at older ages, with 58 per cent thinking they would retire at 65 to 69 in the period July 2012 to June 2014, up from 54 per cent in the period July 2010 to June 2012. Over the same periods, the share of people who thought they would retire at 60 to 64 fell from 27 per cent to 21 per cent.
But despite some indications of increasing confidence in pensions, 59 per cent said they were not confident of having enough income in retirement to maintain the standard of living they were hoping for.
Old Mutual Wealth retirement planning expert Adrian Walker says: “It is very worrying that so few people feel confident about having enough money to provide the standard of living they hope for when they retire. Although the state pension and the introduction of the triple lock will provide a basic income, it is important people recognise that this is a safety net, not a comfortable retirement income and for younger people it may not be available until later in life as the state pension age increases. Our own YouGov research suggests that among those soon to reach retirement, more people expect to rely on the state pension than currently do so – although a proportion of them also have other sources of investments which will help boost their retirement income.”
Barnett Waddingham senior consultant Malcolm McLean says: “Whilst this is all good news and bodes well for retirement saving generally there is still something of a mountain to climb before we can feel confident that the majority of the population can look forward to a financially secure retirement. Indeed when asked, many individuals said they were not confident of having enough income in retirement to maintain the standard of living they were hoping for. Whether the current extensive reforms to pensions both in the public and private sectors will have the capacity to improve the situation even further remains to be seen.”