If the thought of saving for the future brings you out in hives, get ready to face your fears – we’ll soon have a new system where companies automatically put us on a pension scheme unless we choose to opt out.
When you think about your ‘golden years’, do you have hazy visions of cruise ships, gardening and grandchildren? This could be a distant dream if recent figures are anything to go by.
Prudential has found that 21% of people planning to finish work this year won’t be debt-free.
Are you saving enough?
And this figure is only going to rise – many young people are simply not saving for their futures and are making no payments into an occupational or private pension whatsoever. In my last two jobs I was lucky enough to be offered very good pension schemes, which I joined because I was told by more experienced colleagues that I’d be crazy not too.
But would I have bothered if I hadn’t had that nudge? Possibly not – after all, lots of my friends aren’t putting anything into a pension.
Meanwhile many people who are saving for their pension aren’t saving enough. Perhaps they don’t realise how much money is needed in order to get a decent monthly income in retirement.
The figures can be a little eye watering. For example, a single 65 year old man with a pension pot of £100,000 can only look forward to a monthly income of around £530 through his retirement. Doesn’t sound like much, does it?
Is auto-enrolment the answer?
The government predicts that the global population aged over 60 is expected to triple in the first half of the century to reach around 2 billion. Similarly in the UK, the over-85 group is projected to more than double over the next 25 years to reach 3.3 million.
It may be a cliché, but unless attitudes to saving change we really will be heading for a pensions time bomb. The government’s answer is a new system that will soon require all employers to offer pension schemes into which qualifying employees will automatically be enrolled.
This means you’ll no longer opt in to your pension scheme – instead, you’ll be automatically enrolled unless you choose to opt out. To me, auto enrolment is a crucial first step in encouraging more people to save. Hopefully, once the scheme is embedded, automatic penions saving will simply becomes the norm rather than the exception.
Your thoughts on pensions…
We want to hear your opinions to use in our lobbying work. Why do you think people aren’t saving into a pensions pot? Is it that younger people are focussed on paying off student debt and older people are busy worrying about their mortgages and supporting elderly parents?
Do you think people have people lost faith in the pensions system – or is there a different way to save for retirement?
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