AEGON: Facing up to a bleak retirement?

Updated research, published by the National Statistics Office, shows that almost half of people coming up to retirement are facing up to a less than comfortable retirement. But the research found people are prepared to carry on working after retirement to improve their lot in life.

The research - Expectations of retirement income, 2006 - showed 44% of 55 to 64 year olds not yet retired didn't believe they would definitely have enough to live comfortably in retirement. The research also showed 85% of people not yet retired in 2006 said they would be prepared to do some paid work after state pension age if it meant a better standard of living.

Rachel Vahey, head of pensions development, says: "The golden era of retirement is coming to an end and many people are anxious they won't have enough money to provide for a comfortable old age. But the good news is that the vast majority are facing up to reality and are prepared to work for longer, beyond state pension age, to make up the shortfall.

"Although we should be celebrating that people both are prepared and able to work longer, they could perhaps avoid this with forward planning. Making the most of the tax advantages and any employer contribution from saving within a pension is a prime way of making sure retirement really means retirement, and people aren't forced to work for longer just to make ends meet."

Women sticking with the savings habit

The proportion of women saving within a private pension scheme has remained roughly level over the last six years, whereas the proportion of men saving has fallen over the same period.

The estimates from the Family Resources Survey (published today by the National Office of Statistics) show the proportion of women saving in a private pension has changed from 38% in 1999/2000 to 37% in 2005/06. The proportion of men saving in a private pension has fallen from 49% in 1999/2000 to 43% in 2005/06.

Rachel Vahey, head of pensions development, says: "In general women's pensions still fall considerably short of men's so it's encouraging to see they are bucking the trend and sticking with the savings habit. Women often have to work harder to get a decent pension to make up for career breaks and the fact they tend to live longer than men. Hopefully this signals that women are beginning to face up to these challenges.

"It is disappointing that fewer people overall are saving in private pensions, partly due to changing employer and employee attitudes to pensions. The Government's pensions reform agenda - and the publicity campaign it will have to run for both employers and employees over the next few years - will hopefully encourage more people of both sexes to save for their retirement using private pension plans and the key tax advantages they offer."