Pensions: The UK needs a wake-up call. And soon.
The number of people saving into a private pension has slumped to a record low, according to new Office for National Statistics data.
The figures reveal that only 35 per cent of men and 32 per cent of women under 65 years old paid into a private pension scheme in 2011-2012.
And of those who are contributing, the monthly contributions are, generally, a woefully low percentage of their salaries.
These shocking figures highlight what the deVere Group has been saying for years – that the government must do more to revitalise a savings culture in the UK.
Pension tax reliefs alone are, clearly, not enough to encourage people to save for their retirement in this way – therefore pensions should be actively promoted because history has shown us that they are amongst the best ways of securing financial freedom in our older years.
It would appear that most Brits simply aren’t disciplined enough to get into the habit of putting money aside for their retirement. And this is bad news for the individual and bad news for the country as whole.
My message to the individual would be this: By failing to effectively plan for your mature years, when you hit retirement age (65) you’ll need to accept that you are most likely going to have to work into your 70s (which is fine if that is what you really want to do because you enjoy your work – and providing that you still able to work, and that employers are seeking septuagenarians to join their workforce) OR you are going to have to considerably compromise your lifestyle in retirement.
My message to the government would be this: It will, of course, cost time and money to re-educate people on the real, tangible benefits of saving – but the costs of not doing so will be infinitely higher. A savings culture is crucial to the UK’s long-term competitiveness and economic growth because increasing life expectancy has left the State with a situation it can ill-afford. Therefore, the government needs to invest in promotional campaigns to encourage people to seek financial planning advice and take greater control of their own financial destiny.
Nigel Green deVere Group