Figures released today by the ONS* suggest that 20 million working-age adults (aged 16 to 64) may be sleep-walking towards a disappointing retirement.
There are approximately 40 million working-age adults in the UK1, and half (54%) state they are confident that they will enjoy the income in retirement to which they aspire. This is despite two-thirds (68%) having given no thought as to how many years of retirement they may need to fund, and less than half (42%) saying that they understand enough about pensions to make decisions about retirement.
The employer pension is consistently seen as the safest way to save for retirement. This attraction will have been boosted by automatic enrolment which has brought 8 million people into pensions since it was introduced in 20122. Evidence suggests that most new savers are saving at minimum levels – currently 1% of employee salary, matched by 1% from the employer. At minimum levels, few will enjoy the retirement income to which they aspire.
Commenting on today’s report, Alistair McQueen, Head of Savings & Retirement at Aviva, said:
“This report is a wake-up call for UK adults. Millions are sleepwalking into a disappointing retirement by failing to give proper thought towards their financial future.
“Financial confidence is a minority sport in the UK. Support for all savers is critical, as is greater public awareness and understanding.
“Automatic enrolment is the savings vehicle that will carry most people towards their retirement. By staying in their auto enrolment scheme, ordinary working people are helping to build a more robust retirement. But even when minimum saving levels rise to 8% of salary in 2019, millions are unlikely to achieve the income in retirement that they would like.
“Aviva believes that the minimum levels should be raised towards 12.5% by 2028 to deliver against the expectations of many people.
“Aviva is also committed to helping savers take control of their own saving. Our free online “Shape my future” service3 has been used by hundreds of thousands of savers since it was launched in late 2016. More than 40% of users have been under the age of 40 – the hardest age group to engage. The service helps people understand if they are on track for their retirement aspirations, helping hundreds of thousands of savers wake up to the savings journey that lies before them.”
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Notes to editors:
- Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers.
- In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.
- Aviva’s asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £340 billion in assets. Total group assets under management at Aviva group are £450 billion.
- Aviva helps people save for the future and manage the risks of everyday life; we paid out £34.4 billion in benefits and claims in 2016.
- By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.
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