Aegon has raised concerns about auto-enrolment (AE) after finding one in seven workers aged 55-65 are approaching retirement age without a private or workplace pension.
The poll of 2,004 people in December 2016, conducted by Censuswide on behalf of Aegon, showed that 20% of women between the ages of 55 and 65 have no savings for retirement, as well as 12% of men. This means 1.2 million people are approaching retirement age with nothing to supplement their state pension.
The provider's Readiness Report research also revealed that the number of people without a private pension drops dramatically when people enter the workplace.
This demonstrates the effect of AE as many people benefit from workplace pensions, but then uptake flattens right up to retirement age. For example, the survey found 41% of people aged 18-24 do not have a pension, which shrinks significantly to 16% for those aged 25-34 and remains at 16% up to age 65.
Aegon head of pensions Kate Smith commented: "AE, which launched in 2012 as the government's flagship policy to increase the number of people saving for retirement, has undoubtedly been a success. To date, 7.5 million employees have been enrolled into a workplace pension scheme and for many of these people, this will have been their first pension.
"However, as our figures show, there is a portion of the population who either feel unable to or are unwilling to save for retirement. This may include those who are self-employed or in the ‘gig' economy and those employees who do not meet the earnings or age criteria for AE. Others may consciously opt out of a workplace pension perhaps for affordability reasons or simply not recognise the benefits of pensions over other forms of saving."
She also pointed out there is likely to be a portion of people who prioritise a house purchase above other long-term saving. The size of deposits required now can mean it takes longer to get on the property ladder, which will have a knock-on effect to free up cash to save into a pension.
"Our findings show how critical it is that the 2017 review of AE brings more people into its scope and that we find equivalent nudges to help the self-employed and gig economy workers save for pensions as the default."
Smith added that the government should talk more about the importance of pensions and ‘saving with your employer in order to save for yourself', stating that the "value of pension saving needs to be a priority." She also believes that people have a personal responsibility to save for retirement, that everyone should be saving "more than the minimum" in order to build a bigger pension pot.
It is likely that those without pension savings are reliant solely on the state pension, as they may not have other savings. Furthermore, the new single tier state pension will be equivalent to an income of £8,297 per year, for those entitled, and it will also no longer be possible for spouses to inherit their partner's pension.
Smith continues: "Saving a modest amount can really add up over the years and the good news is that a £100 pension contribution, for example, costs people much less than its face value. This is because the government gives people a bonus so a £100 contribution only costs a basic rate taxpayer £80 in take home pay, and the government then tops up the pension by £20."
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