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Two Thirds of Savers Worried Pension Isn’t Enough

Written by on 11 March, 2010

Just one third of workers believe that their pension will give them enough money when they retire, a report from the National Association of Pension Funds (NAPF) has shown.

A worryingly small 34% of savers believe that their pension will be enough money for their retirement, the NAPF’s quarterly Workplace Pensions Survey reveals. Interestingly, this fear does not mean that they do not trust their pensions, with almost half of the savers questioned seeing pensions as the best way to save for retirement. A staggering 44% of respondants felt that it was the most profitable route, which is an increase of 8% from the last report in December 2009. This is compared to just 18% that saw property as a beneficial retirement fund. The report showed a decrease from last year in the number of people who see ISAs and property as the best ways to save up for old age.

Further proof that workers still believe in the worth of a pension are the findings that 77% of employees would favour an employer who offers a workplace pension scheme over one who does not when considering work. Moreover, a pension is valued as the most important employee benefit other than salary that an employer can provide. 38% believe that a pension is the most crucial benefit, while only 19% thought a bonus was important and 13% saw flexible working hours as a major plus.

Perhaps due to the recession, workers see health insurance as less important than a generous holiday allowance, suggesting that hard working employees are seeking more time off work. This comes soon after a report that found a huge proportion of workers are doing ten hours a week of unpaid overtime.

The research also inquired what would make savers more likely to put their money into a pension, with findings suggesting that workers want reassurance and added security to make them feel better about life in retirement. Despite current talks of enabling early access to pensions, only 10% of the 1,248 asked said that this would make them more confident in saving their money.

When asked, 27% of people said they would be happier with saving into their pension if they were certain that they wouldn’t lose any of the money paid in. The report implied a lack of confidence in the pensions scheme as 26% stated they would like a guarantee that the money wouldn’t run out before they died, and 13% would want assurance that they wouldn’t lose out on other benefits as a consequence of being part of a scheme. The need for certainty in the safety of pensions is to be addressed in the Investment Conference next week, NAPF has said.

This pessimistic view on pensions comes just days after the news that company pension fund deficits have increased radically, so that they are now far greater than at the height of the 2008 stock market crash, as reported by an HSBC analyst. However, workers displayed that they still have faith in the pension system as 17% of those saving say they plan to increase their contributions over the next year, while only 8% intend to stop or decrease their savings. Most, however, plan to make no changes and to continue as they are.

Of those questioned in the survey, 57% were currently members of a workplace pension scheme, while 30% were not a member of the one at their work. 13% had no access to a pension scheme.

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