More than half of defined contribution (DC) pension savers in the UK do not believe they are on track to live the kind of lifestyle they want in retirement, a survey by BlackRock has uncovered.
The asset manager's survey of 1,000 DC members found that 51% believe they are unable to save sufficiently to achieve the retirement they want, compared with 44% in 2018.
The findings also show that 100% of those aged over 65 feel that they’re falling behind on their retirement saving.
Moreover, 51% of respondents said that they are likely to review or reduce their pension contributions in a bid to prioritise “rainy day” savings amid the ongoing COVID-19 pandemic.
“Many people are struggling with matching expected retirement lifestyle with what will be reality,” said Alex Cave, head of UK institutional defined contributions at BlackRock.
“Ensuring the right level of portfolio risk /return, and appropriate levels of contributions of at least 15% of salary over time, are critical to ensuring the type of lifestyle savers expect in retirement.”
Worryingly, the ‘magic number’ of 15% of salary contributions seems an impossible target for many, with 49% of the survey participants saying they are not contributing enough.
The findings also show that only 35% of respondents believe their contributions need to equal or exceed 15% to meet their retirement goals, and just 13% currently make a combined contribution of 15% or more.
Despite just 44% now seeing retirement saving as important, BlackRock expects this figure to rise to 49% by 2025.
However, the company warned that current retirement expectations are not achievable without changes to contribution rates, retirement dates and the levels of risk/return in investment portfolios.
“It is imperative to stress the need to stay committed to pensions through these months of uncertainty, particularly in light of the potential ‘lower forever’ rate environment for savers,” Cave said.
“We are reassured by our research finding that savers’ focus on their pension pots will likely become a post-pandemic priority – with nearly half of respondents considering retirement saving important by 2025.”
Image credit: iStock
Author: Chris Seekings