Half of pension savers fear they can NEVER afford retirement

More than half of people who save for pensions believe they will never save enough to stop working when they are older, new research reveals.

Pessimism about never being able to retire was almost as prevalent among homeowners — many of whom face rising mortgage costs as well as other household bills — as among pension savers in general.

According to the Living Wage Foundation study, about 39 percent of homeowners fear they aren’t saving enough for a comfortable retirement and 34 percent fear they won’t even be able to cover their basic living expenses.

Meanwhile, 8 percent of homeowner pension savers suspended or reduced pension contributions in the six months to February 2023, it found.

The campaign group is trying to address low levels of retirement savings by promoting ‘Pension for Life’ and recruiting employers who are willing to contribute to workers’ pensions more than the mandatory minimum rates.

Under car registration, employers must contribute a minimum of 3 per cent of their income, between £6,240 and £50,270, towards their pension, while workers contribute 4 per cent and the Government adds 1 per cent. percent in tax relief.

However, many employers are willing to make matching contributions of 4, 5 or 6 percent if you choose to save a larger proportion of your income in a pension.

Who Pays What: Breakdown of Minimum Pension Contributions for Base Rate Contributors on Automatic Enrollment Today

The Living Pension campaign is pushing for an increase in the overall savings target from 8 percent to 12 percent overall.

And it is trying to persuade employers to increase their contribution from 3 percent to 7 percent for all directly employed staff, regardless of age and income, and eventually for staff hired by third parties as well.

The Living Wage Foundation says survey results on people’s fears of never being able to retire show that even people who own their own home struggle to save and plan for the future.

Director Katherine Chapman says: ‘Low-wage homeowners will feel the pinch the most, and the cost-of-living crisis is making the situation worse. Pressured by rising mortgage, food and energy costs, homeowners will find it increasingly difficult to save money for retirement.’

The Living Wage Foundation survey found that 54 percent of homeowners who contributed to a pension in the 12 months to February 2023 don’t think they’ll ever stop working.

That compares with 56 percent of people surveyed overall.

The foundation surveyed 3,059 working adults who contribute a pension, weighted to be representative by age, gender and region. Some 1,973 were homeowners, 848 renters, 216 lived with their parents, and 22 indicated other living conditions.

> How much do you need for a basic, moderate and comfortable retirement?

The foundation’s Living Pension campaign has seen 18 employers sign on to its voluntary savings targets since it launched in March.

They are: Aviva; Phoenix Group; Herbert Smith Freehills; get rich; Edinburgh Surgeons Quarter; Commit Digital; FieCo Accounting and Marketing Ltd; sportingly; Smart meter assets; Ticket to ride in Highlands; EMB Group; Behind the scenes virtual assistant; Housing on the Coast; Scottish youth; Young Hammersmith and Fulham Foundation; My life my decision; Good Things Foundation; Citizens of the United Kingdom.

That compares with the 13,000 employers it has contracted to pay workers the living wage, which launched in 2001.

The group’s UK living wage outside of London is £10.90 per hour, and the London living wage is £11.95 per hour. These rates apply to all workers over the age of 18, which the foundation says recognizes that young people face the same costs of living as everyone else.

The government’s official national living wage rate for people age 23 and over and its national minimum wage for those at least school leaving age are below. These are the current rates and are increased each April.

“I have no choice but to sell my house”

The Living Wage Foundation interviewed savers about their struggle to cope with retirement to highlight the pressure many people find themselves under.

Widow Eva, 65, is selling her property to help cover her expenses as she approaches state retirement age. She says: ‘I will collect my state pension because I can’t afford not to. I intend to keep my job and am looking for more hours but not having much luck.

‘I am in the process of selling my house and turning it into a small joint ownership. This will free up some capital, making the future financially easier.

‘I have no choice but to sell my house and move to a smaller place. My house is an old house with four bedrooms and two living rooms, there is a lot to heat and maintain, and since only I live here, it makes sense to move to a smaller house.

‘My partner died almost three years ago and we had been together for more than 43 years, but we had never been married. That is why she was not entitled to any widow’s benefit.

‘We had savings, but I’ve used almost half of it in the last three years and that’s just been to pay bills, buy food and the normal things that everyone does.

‘I’ve had two holidays, but I haven’t bought any new furniture etc. My state pension will make a difference. I earn £100 a week and receive a monthly employment pension of £117. My state pension will be £206 a week, so that will be a great help.’

“State pension is not enough”

Sarah, a homeowner in her 50s, says the closer she gets to retirement age, the more she thinks she’ll never be able to fully retire.

“I’ve worked hard all my life, owned my home with the help of a mortgage, but the relatively low cost of living and income over the years has meant a lack of disposable income to save for my retirement and State pension is not enough to cover even the basic requirements.

‘The situation has gotten even worse for my generation as we are currently dealing with high mortgage interest rates and higher bills for our basic needs.

‘However, wages have not increased at the same rate and it is important to note that women’s wages are often considerably lower than men’s.

‘The retirement age has also increased, which means less time and money to enjoy my life before I die. It’s a very bleak picture and I feel as though we have entered a time where ordinary people will be forced to work themselves to death and there will be no such thing as “retirement”.

How to manage your pension if you fear that you will fall short

1) If you are concerned about whether you have saved enough, research your existing pensions. In general terms, it is necessary to ask the schematics the following questions.

– The current value of the fund.

– The current value of the transfer, because there could be a penalty for the transfer.

– If the pension is based on final salary or defined contribution. defined contribution Pensions take both employer and employee contributions and invest them to provide a reserve of money at retirement.

Unless you work in the public sector, they have now mostly replaced the more generous gold plated ones. defined benefit – average or final career salary – pensions, which provide a guaranteed income after retirement until death.

Defined contribution pensions are more stingy and savers bear the investment risk, rather than employers.

– Whether there are guarantees (for example, a guaranteed annuity rate) and whether you would lose them if you moved the fund.

– The projection of the pension at retirement age. You can use a pension calculator to see if you will have enough; they are widely available online.

2) You need to add your forecast figures to what you expect to receive in state pension, which is currently £203.85 a week or around £10,600 a year if you qualify for the new full rate. Get a state pension forecast here.

3) If you are tempted to merge your old pensions, read our guide first to make sure you won’t be penalized.

4) If you have lost track of the old pots, the The free government pension tracking service is here.

Be careful when you search online for the Pension Monitoring Service, as many companies using similar names will appear in the results.

They will also offer to look for your pension, but they will try to charge you or whip you for other services, and they could be fraudulent.