One in eight plan to retire without a pension

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One in eight people (12%) have made no provision for their retirement, including 10% that will be totally or somewhat reliant on the State Pension, Prudential has found.

Some 18% of these are women and just 7% men. This leaves them starting their retirement with an income of around £1,452 a year below the Joseph Rowntree Foundation’s (JRF) Minimum Income Standard for a single pensioner.

Stan Russell, retirement income expert at Prudential, said: “The long-term trend for the number of people retiring without a pension is down and that is good news.

“But there is still some distance to go and it is worrying so many people will be entirely reliant on the State Pension for their income in retirement.

“While the State Pension is an important part of retirement income, it shouldn’t be the only part and those still in work should if at all possible be contributing to a pension and saving towards their retirement.

“It is never too early to start saving into a pension and even a small amount each month can make a difference and help from a professional financial adviser can be invaluable in helping plan for retirement.”

The numbers retiring without a pension is lower than the 14% in 2017 and now nearly half the 23% recorded in 2008.

The gap between men and women is narrowing over time – in 2016, 22% of women had no retirement savings compared with 7% of men. While in 2008 a third of women (32%) were planning to retire without a pension.

A tenth (10%) of those retiring in 2018 will either rely somewhat or solely on the State Pension, which for those retiring after April will mean an income of £164.35 a week, or just over £8,500 a year.

Taking the JRF’s Minimum Income Standard of £192.27 a week for a single pensioner, which is a benchmark of the income required to support an acceptable standard of living, those relying on the State Pension will fall short of the minimum standard by £27.92 a week, or £1,452 a year.

The research highlights the significance of the State Pension to people in retirement including those with pension savings of their own.

On average, people expecting to retire this year estimate that the State Pension will account for more than a third (33%) of their income in retirement.

Of those retiring in 2018 who do have a pension of their own, two fifths (42%) have the majority of their pension in a workplace final salary scheme.

Some 13% have their savings in a personal pension which is not through their employer and 12% have the majority in a workplace defined contribution scheme.

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Written by: Houseladder