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25 Oct 2017

Millions don´t pay into a pension, FCA survey reveals

Millions of people in the UK are not saving enough for their retirement, according to the Financial Conduct Authority (FCA).

For many people, the state pension will not be enough to maintain living standards. Yet the FCA´s Financial Lives Survey 2017 revealed that around 15 million adults who are not retired are not paying into a pension.

Self-employed people and those out of work are, respectively, twice and three times as likely as those in employment to have no pension savings apart from the state pension.

Just 35% of people aged 45-54 have given a great deal of thought to how they will manage financially when they retire. And 18% in this age group admitted that they have not really thought about how they will manage financially in the later stages of their lives.

Among 55 to 64 year olds, just over half (52%) said they have given the matter a great deal of thought, while one in eight (13%) have not thought about it at all.

Writing in the Daily Mirror, FCA chief executive Andrew Bailey said that around half of those currently aged 55-64 are expected to live to 90 or beyond. But in the Financial Lives Survey, only 7% of this group think they will live to this age.

This difference has a big impact on financial planning, with many savers looking forward to enjoying their leisure in the early stages of retirement, rather than worrying about care costs later on, Bailey explained.

There were also some positive findings in the survey, including indications that auto-enrolment is increasing pension saving among those nearer the beginning of their careers.

However, 50% of UK adults (25.6 million) show one or more characteristics of potential vulnerability and 24% have little or no confidence in managing their money.

“The financial services industry has an important part to play in helping to meet the challenge of saving for retirement and balancing their immediate needs,” Bailey said.

“This includes providing reliable and appropriate information and guidance. Saving for retirement is difficult for people who have to make ends meet today.”

Copyright © M2 Bespoke 2017

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