Research by Norwich Union, the UK’s largest insurer, shows that 60 per cent of stakeholder pension customers plan to retire at age 60 or earlier.
Research by Norwich Union, the UK’s largest insurer, shows that 60 per cent of stakeholder pension customers plan to retire at age 60 or earlier.
However, too many stakeholder customers are paying insufficient contributions into their plan to ensure that they have a comfortable amount to retire on at their desired retirement age.
For example, 77 per cent of stakeholder customers between the age of 31 and 45 are paying less than Ł150 a month into their plan.
The impact of this could be stark for someone planning to retire early.
For example, a 35 year old male, paying Ł150 a month into a stakeholder pension and planning to retire at 65, would have a projected pension pot of Ł149,000 at retirement and a pension of Ł13,700 (based on investment growth of 7 per cent a year and interest rates of 6 per cent at time of retirement).
However, using the same example, if you bring forward the retirement date by five years to 60, then the customer would have a projected pension pot of Ł46,000 less at Ł103,000 and a pension of Ł8,430, which is 38 per cent less.
Commenting, Louise Goffee, spokeswoman for Norwich Union said,
“Stakeholder has undoubtedly given impetus to the pensions market, however, most people want to retire as early as possible but are simply not doing enough about it. Unless people contribute more, their chosen retirement dates could end up being no more than wishful thinking.
"Anyone who is unsure about the financial implications of retiring should seek professional advice from their financial adviser.”
-Ends-
| Press office contacts: | ||
| Out of hours | ||
| James Evans, head of media relations | 08703 66 68 78 | 07790 487105 |
| Louise Goffee, media relations manager | 08703 66 68 70 | 07810 057362 |
| Ian Beggs, media relations manager | 08703 66 68 71 | 07790 487533 |
Notes to editors:
Analysis of the retirement ages selected by those taking out individual stakeholder pensions with Norwich Union shows that:
- 46% of customers chose 60 as their retirement age, significantly ahead of the 33% of customers who chose 65 as their retirement age
- 95% of customers are planning to retire on or before 65
- 62% of customers plan to retire on or before 60.
- 14% of customers are planning to retire in their fifties.
- Only 4% of customers plan to retire at 75.
However, customers are generally paying too little into their pension to achieve a comfortable retirement.
Amongst the 18 to 25 age group, over 90% of customers are paying less than Ł150 a month into their stakeholder.
Amongst the 31 to 45 age group, 77% of customers are paying less than Ł150 a month into their stakeholder.
The impact of this on a 35 year old’s ability to retire at 60 compared to 65 can be seen from the examples below:
| Male aged 35, planning to retire at 60 | ||||||
| Monthly contribution | Pension pot if his investment grows at…. | Pension at 60, if interest rates are…. | Or tax free lump sum (assumed 25%) and reduced pension | |||
| | ||||||
| Ł150 | 5% - Ł77,500 | 4% - Ł5,280 | Ł19,300 cash, plus pension of Ł3,960 | |||
| 7% - Ł103,000 | 6% - Ł8,430 | Ł25,700 cash, plus pension of Ł6,320 | ||||
| 9% - Ł138,000 | 8% - Ł13,300 | Ł34,600 cash, plus pension of Ł9,980 | ||||
| Male aged 35, planning to retire at 65 | ||||||
| Monthly contribution | Pension pot if his investment grows at…. | Pension at 65, if interest rates are…. | Or tax free lump sum (assumed 25%) and reduced pension | |||
| | ||||||
| Ł150 | 5% - Ł105,000 | 4% - Ł8,230 | Ł26,200 cash, plus pension of Ł6,170 | |||
| 7% - Ł149,000 | 6% - Ł13,700 | Ł37,300 cash, plus pension of Ł10,200 | ||||
| 9% - Ł216,000 | 8% - Ł22,800 | Ł54,000 cash, plus pension of Ł17,100 | ||||
Separate projections for female customers are available from the Norwich Union press office. The figures shown above are only examples and are not guaranteed - they are not minimum or maximum amounts. What customers will get back depends on how their investment grows and on the tax treatment of the investment.
They could get back more or less than this.
All firms use the same rates of growth for illustrations but their charges vary. They also use the same rates to show how funds may be converted into pension income.
Inflation would reduce what they could buy in the future with the amounts shown.
Their pension income will depend on how their investment grows and on interest rates at the time they retire.
Norwich Union is the UK’s largest insurer. It is the UK’s largest provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 75% of the company’s long-term savings business.
Norwich Union has strategic alliances with over 20 building societies and other leading UK brand names including Tesco Personal Finance Limited and The Royal Bank of Scotland Group.
- Norwich Union’s news releases are available on this website.
- A selection of images are available from the Norwich Union Newscast site at www.newscast.co.uk
- An ISDN facility is available for studio quality interviews. Call the press office on 08703 66 68 73
For all life & pensions media enquiries 08703 66 68 73
For all other media enquiries 08703 66 68 68