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Lack of saving leaving UK pension pots lacking

18th September 2014 Print

A relative lack of effective saving is leaving the average Briton in line to struggle significantly in financial terms throughout the course of their retirement years, according to a new report.

Most of us envisage retirement as a time of relaxation and opportunity but it could be that millions of Britons will find themselves unable to cover even basic costs when they head towards old age. At least that’s according to new research report that looks into the expectations and the reality of retirement saving among people from across the UK. 

More than 6,000 people were polled by True Potential on the subject of pension saving in recent weeks, with a third (32 per cent) suggesting they’d need between £16,000 and £25,000 per year in retirement in order to live comfortably. 

Unfortunately, creating that kind of financial flexibility during 20 years of retirement would require a pension pot of around £400,000, which now looks to be beyond the reach of a majority of us. According to True Potential’s figures, the average Britain contributes roughly £2,600 each year to their pension pot, which would amount to less than £120,000 even after 45 years of saving. 

Getting by on between £6,000 and £10,000 per year is not a prospect that many people living in the UK would relish or look forward to but it could well be a very common and even a prevalent circumstance if current trends continue. 

“Without an enormous change in behaviour, it will be simply impossible for millions of people to retire until well into old-age. Indeed, many millions may never be able to retire,” said True Potential’s managing partner David Harrison in response to the recent findings. 

“Most people still prefer to save in cash and that simply means that inflation will erode their savings further. No one knows if there will even be a state pension to plug the gap in years to come and I am afraid the picture looks very bleak indeed.” 

Earlier this year, a report from the financial services firm Prudential found that British women expect much lower retirement incomes than their male counterparts. According to the study, the average man in the UK expects to receive an annual income of £18,900 during their retirement years, whereas women expect to live on a little over £12,000 on an annual basis once they’ve ended their professional careers.  

Conrad Ford is Managing Director of Check Business, a technology start-up that helps SMEs solve the key business challenges of: getting paid, finding new customers, and raising finance. Conrad has a Masters from Cambridge University. You can find more information on his website or follow him on Twitter.