Workers neglecting pensions - Pensions - News - Moneyfacts

News

Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Workers neglecting pensions

Workers neglecting pensions

Category: Pensions

Updated: 04/08/2009
First Published: 29/07/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Approximately 16 per cent of workers who have a pension admit to having reduced the amount they contribute to it over the past five years, or have stopped adding to it at all.

The research conducted by Prudential means the UK potentially faces a rise in pensioner poverty in the future, with the number of people relying on state pensions and their own savings on retirement growing to 27 per cent over the next decade, compared to 22 per cent this year.

"It's worrying that many people who have been working for years and saving for retirement seem to have given up hope and stopped paying into their pension," said Martyn Bogira, Prudential's director of defined contribution solutions. "This is the last thing they should be doing."

The figures also showed that as many as two in five people who said they have designs on retiring this year have the majority of their retirement pot housed in a final salary pension scheme.

This drops to around one in three people that are due to stop working in the next decade, with the fall a reflection of the continuing closure of final salary schemes to new members, which increased from 49 per cent in 2006 to 50 per cent in 2007 and 53 per cent in 2008.

Furthermore, almost one in ten (nine per cent) workers have moved out of a final salary scheme in the last five years because their employer has shut them down in favour of defined contribution pensions, or because a move a new job only offered a defined arrangement.

However, reliance on defined contribution schemes is not showing signs of increasing, despite the steady disappearance of final salary schemes. Twelve per cent of people who expect to retire this year have the majority of their savings in a defined contribution pension, growing to just 14 per cent of people who expect to retire in the next decade.

"Although it has been well documented that final salary schemes are in decline, our research has not shown a corresponding increase in defined contribution scheme participation, which implies that people are reducing contributions or stopping paying into pensions altogether," Mr Bogira observed. "This is a disturbing development."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Have you lost track of your pensions?

The changing nature of the jobs market means it’s highly likely that you’ve got more than one pension pot, but the question is, do you know where they all are? According to research from Aegon, many people don’t.

Grandparents missing out on pension protection

Grandparents who give up work to take care of their grandchildren could be missing out on valuable state pension rights. So, if you're a grandparent taking care of a little one, make sure you’re building up all of the pension that you deserve.

Setting goals could boost your pension pot by £30K

Setting goals can be the key to success in many areas of life, helping motivate you to achieve anything from career progression to building up that house deposit - and if you have goals set for retirement, you could boost your pension by £30,000.
 
Close