According to a new study, only one in three people employed within the UK (or nearly 15 million workers) said that they do not have a private or company pension – meaning that they will rely on the state pension to support them financially in retirement.
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Yet with the latest government reforms on state pensions, many of these people might be in for a shock later on in life.
The government recently announced a raft of changes to pensions, meaning that the pension ages will be pushed back to 67, with thousands of people losing out.
The latest research from Prudential found that those who currently do have a pension contribute an average of 6.2 % of their annual income to pension schemes.
The survey of 1,602 working adults also found that women are far less likely to save for their retirement, with 41% saying that they do not currently have a pension compared to just 29% of men.
Vince Smith-Hughes, head of business development at Prudential, said; “Failing to save into a pension means not only having to rely solely on the State Pension in retirement, but also missing out on the ‘free money boosts’ which come with pensions, such as tax relief and employer contributions.”
“Making regular pension contributions is a vital part of securing a comfortable retirement. Although saving for retirement may not be a priority for young people, the more money which is stashed away from an early age, the more likely that significant rewards will be reaped later in life.”
“When coupled with the benefits of any additional employer contributions or gains through fund performance, a pension is the best way of saving for retirement, for many people.”
An average worker in the UK earns almost £1 million over the course of their working life (according to The Office for National Statistics). The average tax relief on pension contributions is £334 per year, per person paying the basic tax rate. Higher tax payers could therefore lose a significant amount by not paying into a private or company pension scheme.