Only 7% of the UK population are close to being ready for the retirement they want, with nine out of ten people falling well short of their targets, pensions and savings provider Aegon has claimed today.
30 APRIL 2014 | BY JUDITH UGWUMADU
This means on average people will be £23,000 a year down on their expected retirement income, according to a poll undertaken by the firm.
Aegon's UK Readiness report found that workers in Britain want an annual retirement income of £35,000. It highlighted that at their current pace retirement savers would likely see just £12,000 a year when they reached the end of their working life, pointing to a huge gap between expectation and retirement reality.
The firm said it was worrying that only 3% of the 4,062 adults polled knew how to plug the shortfall and improve their financial situation.
David Macmillan, managing director at the Aegon, said: 'We know that most of the UK population are falling short of their retirement objectives, and that many aren't reviewing savings enough to be aware of the shortfall.'
He said it was time for the UK to get real as he urged the pension industry to lead the way in helping people find solutions.
Elsewhere in the report, workers are confused about how much state pension they would receive, marked by a majority of those polled (56.4%), believing that the maximum state pension was higher than £110.15 per week.
The report also looked at retirement readiness between the two genders. It highlighted that men were more prepared than women, including making significantly higher regular pension contributions (£328 vs. £175 per month).
It also suggests that those approaching retirement are more hands on, with 48% of 55-64 year olds having reviewed their retirement plans in the past six months, while only 22% of 16-24 year olds had.
Commenting on the report, actuaries Barnett Waddingham said a large proportion of the working-age population was 'sleepwalking' into a financially insecure old age.
Malcolm McLean, senior consultant, at the firm, said he was shocked at the amount of workers unable to fulfil their retirement income expectations pointing to a nation 'woefully ill-prepared' for the challenges that the UK's increasing ageing population would inevitably bring.
He said: 'As a call for action, Aegon's report is timely and an exhortation to us all - the government, the pension industry, consumer groups, advisers and, of course, individuals themselves - to make much greater efforts to improve pension awareness and financial savvy more generally across the population at large.
'If Aegon's research is to be believed, however, a lot more [than auto-enrolment] needs to be done before we can feel in any way confident that the future prosperity and wellbeing for millions of the UK's future pensioners are not seriously at risk.'