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04

One in seven 'have no private pension provision'

Open-access content Tuesday 8th April 2014 — updated 5.13pm, Wednesday 29th April 2020

One in seven people (14%) in the UK will retire with no private pension this year and will be either totally or heavily dependent on the state, according to research published today.

In its study looking at the future plans and aspirations of people who are preparing to retire this year, insurer Prudential revealed that of the almost 8,000 people polled, the North East had the highest proportion of people (20%) expecting to retire with no private pension, followed by the South West at 20%.

In contrast, those in the North West, Scotland and London will be the least reliant on state pension, with just 8%, 8%, and 12% respectively entering retirement without any private pension savings.

Vince Smith-Hughes, retirement income expert at Prudential, said: 'The changes to pensions and how people can take their retirement income announced in the Budget last month will provide savers and retirees with more choices. However they don't alter the fundamental fact that many people are not saving enough for a comfortable retirement.'

The study showed that almost one in five (18%) of those planning to retire this year would have an income below the minimum income standard as defined by the Joseph Rowntree Foundation. According to the UK-based social policy research charity, a single pensioner would need an income of at least £8,600 a year, while a retired couple would need more than £12,500 a year.

Prudential's poll also highlighted that women were nearly three times more likely to rely on the state for retirement income than men. Its study highlighted that 20% of women have no pension savings compared with just 7% of men.

Just over a quarter (27%) of women surveyed had a company pension compared to almost half (47%) the men. The state pension is expected to make up 42% of women's expected retirement income compared with 28% for men.

Smith-Hughes added that it was important not to fall into the trap of overestimating the contribution that the state would make.

 

This article appeared in our April 2014 issue of The Actuary.
Click here to view this issue
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