UK pension ‘confidence crisis’ deepens

Britain’s pension gap continues to increase with more than a quarter (26%) of British adults failing to make any provision for retirement, according to data from the annual retirement confidence index (RCI) provided by financial services provider, Alliance Trust.

The number of people who say they have ‘no form of pension’ has jumped to 26% from 20% a year ago. The outlook is bleaker for women than men. Nearly a third (31%) of women admitted to not making any pension provision in the recent survey, compared with 23% of women in 2006, which shows things are actually getting worse instead of better. Among men, 22% said they had no retirement provision compared with 17% in 2006. Final salary membership has fallen from 30% to 27%, but the biggest fall is in the number of people who believe they will receive a state pension – this fell to 35% this year from 49% in 2006.

The figures from Alliance Trust’s 2007 survey looking into retirement reveal British adults in the prime of their working lives (aged between 30 and 49) are still the least confident about their ability to provide for a comfortable retirement with one in ten stating they were ‘totally unconfident’. Only 1% of this age group stated they were ‘totally confident’ about providing for a comfortable retirement.

Hyman Wolanski, Head of Pensions at Alliance Trust, said: “It is worrying to see that many in the prime of their working lives are most uncomfortable about their retirement prospects. It is clear that serious action needs to be taken to tackle the problem to break this trend. Our research shows it is now more important than ever for people to ensure they have a proper pension plan tailored to suit their individual circumstances. For example, locking regular sums into a pension might often be put off in favour of more immediate financial demands but with the range of saving products available today, there is now much more flexibility than ever in how people can save for their future”.

Over half (55%) of 18-to-29 year olds currently do not have any form of pension, but youth gives assurance, as only 6% of this age group feel ‘totally unconfident’ at being able to provide for a comfortable retirement.

Hyman Wolanski continues: “One important point for them to remember is that pensions aren’t the only way to save for retirement; other more accessible savings products, such as ISAs, could be more appropriate earlier in their savings life, with the option to transfer some of this money into their pension fund later on in their career. But irrespective of the means, it is important action is taken and serious provisions are made.”