Department for Work and Pensions minister interested in Norwich Union for research.
- Department for Work and Pensions minister interested in Norwich Union for research
Commenting on Norwich Union’s extensive research on the public’s attitude to working longer and saving more, Stephen Timms MP, minister of state, Department for Work and Pensions, said: “The Norwich Union research is a useful contribution to the National Pensions Debate, shedding light on people's attitude towards retirement - including retirement age. The National Debate, involving both public and industry, is helping us shape a pension system which everyone can have confidence in.”
The research shows that many people want to retire earlier than they will be able to afford.
One of the most unrealistic groups is 25-34 year olds who, on average, hope to retire at 59, six years early than the state retirement age. Yet nearly 60% of these are planning on saving closer to the time. Figures from Norwich Union show that delaying the start of a pension by five years, requires almost half as much again in contributions to reach the same level of income.
Starting retirement planning at 30 with a payment of Ł100 per month is worth nearly Ł4000 extra pension per year than the paying the same amount per month from age 35.
Iain Oliver, head of pensions at Norwich Union, said: “The earlier people choose to retire the less income buying power their retirement savings have. For example, at 60, a fund of Ł100,000 buys an income of Ł4,320 but at 70 it buys Ł5,950.
"If you want to retire at 60 or before then you need to increase your contributions and start early”.
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Press contacts:
Cheryl Cox 01904 452617 / 07800 695 275
James Evans 01904 452791 / 07800 699 525
Figures
Source: Norwich Union
- Client starts saving Ł100pm at age 30 and retires at 65. Initial Income is Ł11,800. Client 2 starts saving at 35 and retires at 65. Initial income is Ł7930. To make up the difference the client would have to save Ł148.80 per month.
- Ł1 income from age 70 costs the same as 84p from age 65 or 73p from age 60. Ł100,000 at age 60 would give a pension of Ł4,320 per year. At 65 this figures moves up to Ł5,020, and at 70 it is Ł5950.
| 60 | 65 | 70 |
| Ł100,000 | Ł100,000 | Ł100,000 |
| Ł4,320 | Ł5,020 | Ł5,950 |
Assumptions based on FSA projection assumptions: all annuities paid monthly in advance, five year guaranteed funds and increasing at 3% per annum. All annuities are monetary amounts.
Research
The research was carried out by ICM Research on behalf of Norwich Union. ICM surveyed 1,000 adults aged between 18 and 70 (non-retired). It also included mixed gender focus group discussions, BC1CD status, mix of working, semi-retired and retired with varying levels of financial sophistication. The research used both quantitative and qualitative methods.
Norwich Union
Norwich Union is one of the UK's biggest insurers. It is a leading provider of life, pensions and investment products and one of the largest Financial Adviser (FA) providers.
Norwich Union has strategic alliances with building societies and other leading UK brand names including CIS and The Royal Bank of Scotland Group. Norwich Union’s news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media