Third of over-50s have not saved a penny for their retirement
By Chris Brooke
Last updated at 10:31 PM on 14th November 2010
An astonishing one in three older workers have not saved a penny for their retirement, research has revealed.
The failure to plan ahead by such a significant proportion of the population shows the scale of the pensions crisis facing the country.
The survey shows 32 per cent of workers aged over 50 have no pension savings. It means millions face the prospect of living in poverty during their twilight years, relying only on the State pension.
Spend not save: Only one in four people over 50 said they felt financially ready for retirement, while 64 per cent did not think they would have enough to live on
Yesterday one leading campaigner for pension reform described the situation as a ‘national scandal’.
The pensions failure has been put down to a ‘spend rather than save’ culture in the decade leading up to the recent global financial crisis.
The Government’s deficit-reduction measures will now make it even harder for people in employment to adequately fund a pension.
Higher taxes, low interest rates and increasing inflation is set to make the task of saving tougher for struggling families.
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Just one in four people aged over 50 said they felt financially ready for retirement, while 64 per cent said they either did not know how much money they would have when they gave up work, or they did not think they would have enough.
The research by financial services firm MetLife Europe was based on a survey of 1,150 people aged over 50 who had not yet retired.
It found that women were most likely not to have adequate retirement savings, with the average older woman having £34,500 set aside in a pension, just half the £68,800 that the typical man has saved.
What a saga: Ros Altman, director- general of Saga says the whole system of pensions is 'imploding'
Even once State benefits are taken into account, this sum is unlikely to be enough to generate the average retirement income the over-50s hope to have of £18,100, rising to £32,100 among households that currently have an income of more than £70,000.
Ros Altmann, director-general of the over-50s group Saga and a former government pensions adviser, described the number of older people without a pension as ‘staggeringly high’.
She said: ‘The whole system is imploding. ‘It’s a real national scandal. We’ve got millions of people coming up to pension age, what are they going to live on?’
Dr Altmann said the only solution was to reform the State pension to ‘encourage’ rather than ‘penalise’ saving.
If you get to retirement and haven’t got any savings then you can be entitled to much more from the State than if you had savings.
‘The root cause is that the State system undermines private pensions and because of so many scandals and so much complexity, people have just lost faith in pensions and nothing that the Government has done so far has rebuilt that.
‘Pension provision has crumbled since the late 1990s, before that things were much better, employers did more and there was a brilliant retirement savings culture.
‘If people don’t save now they won’t have anything to spend later. In the long run, it’s in all our interests to have an ageing populations with savings otherwise there will be too many people in poverty.’
Dr Altmann said the previous Labour Government had been ‘in denial’ about the crisis.
The Coalition plans to force all companies to enrol staff on a pension scheme from 2012. It also wants to scrap the means-tested State pension system and use savings from reduced bureaucracy to fund a higher £140-a-week flat rate.
By Chris Brooke
Last updated at 10:31 PM on 14th November 2010
An astonishing one in three older workers have not saved a penny for their retirement, research has revealed.
The failure to plan ahead by such a significant proportion of the population shows the scale of the pensions crisis facing the country.
The survey shows 32 per cent of workers aged over 50 have no pension savings. It means millions face the prospect of living in poverty during their twilight years, relying only on the State pension.
Spend not save: Only one in four people over 50 said they felt financially ready for retirement, while 64 per cent did not think they would have enough to live on
Yesterday one leading campaigner for pension reform described the situation as a ‘national scandal’.
The pensions failure has been put down to a ‘spend rather than save’ culture in the decade leading up to the recent global financial crisis.
The Government’s deficit-reduction measures will now make it even harder for people in employment to adequately fund a pension.
Higher taxes, low interest rates and increasing inflation is set to make the task of saving tougher for struggling families.
More...
Silver inflation for over-55s underlines the value message
Pyjama sales enjoying new dawn as Britons take to wearing them in and out of the bedroom
Just one in four people aged over 50 said they felt financially ready for retirement, while 64 per cent said they either did not know how much money they would have when they gave up work, or they did not think they would have enough.
The research by financial services firm MetLife Europe was based on a survey of 1,150 people aged over 50 who had not yet retired.
It found that women were most likely not to have adequate retirement savings, with the average older woman having £34,500 set aside in a pension, just half the £68,800 that the typical man has saved.
What a saga: Ros Altman, director- general of Saga says the whole system of pensions is 'imploding'
Even once State benefits are taken into account, this sum is unlikely to be enough to generate the average retirement income the over-50s hope to have of £18,100, rising to £32,100 among households that currently have an income of more than £70,000.
Ros Altmann, director-general of the over-50s group Saga and a former government pensions adviser, described the number of older people without a pension as ‘staggeringly high’.
She said: ‘The whole system is imploding. ‘It’s a real national scandal. We’ve got millions of people coming up to pension age, what are they going to live on?’
Dr Altmann said the only solution was to reform the State pension to ‘encourage’ rather than ‘penalise’ saving.
If you get to retirement and haven’t got any savings then you can be entitled to much more from the State than if you had savings.
‘The root cause is that the State system undermines private pensions and because of so many scandals and so much complexity, people have just lost faith in pensions and nothing that the Government has done so far has rebuilt that.
‘Pension provision has crumbled since the late 1990s, before that things were much better, employers did more and there was a brilliant retirement savings culture.
‘If people don’t save now they won’t have anything to spend later. In the long run, it’s in all our interests to have an ageing populations with savings otherwise there will be too many people in poverty.’
Dr Altmann said the previous Labour Government had been ‘in denial’ about the crisis.
The Coalition plans to force all companies to enrol staff on a pension scheme from 2012. It also wants to scrap the means-tested State pension system and use savings from reduced bureaucracy to fund a higher £140-a-week flat rate.
