‘Awareness’ key to improving retirement provisions – Equiniti

“Improving awareness of retirement savings” is key when it comes to increasing the amount of extra income above the state pension in retirement, according to Equiniti.

Commenting on the government’s recent Pensioner Income Series, published last month, Equiniti propositions and solutions director of the firm’s pension business, Chris Connelly, said improving awareness of retirement savings is the key to increasing the amount of independent income available to those entering retirement.

Analysis by Equiniti of the figures reveals that 17 per cent of pensioner units in 2017/18 had no income to supplement income provided by the state, an increase from 14 per cent the previous year.

Single pensioners are the most dependent on the state with a quarter having no additional income to state benefits, the highest proportion ever recorded. It means dependence on the state pension in retirement is at its highest levels in the mid-1990s.

“These figures underline how important it is that people continue to learn about the importance of a later life income. It is worrying that one in five UK pensioners seems to be entering retirement with no personal savings or investments leaving them to rely solely on the income the State is able to provide,” Connelly said.

“Auto-enrolment has gone a long way to improving behavioural trends in pension saving, however for the cohort closest to retirement it remains a concern that they will not have any funds of their own.”

The statistics also show the consistent increase in state benefits over the past decade with payments now totalling £229 a week (c.£11,900 a year) on average, the same as the previous year, accounting for more than two-fifths (43 per cent) of pensioner income.

Whereas occupational pension income saw a slight downtick falling from £160 to £148 a week, however it still accounts for over a quarter (28 per cent) of pensioner income.

Earnings income is the third highest component increasing to £92 a week and 17 per cent of total income. Connelly also said that innovations such as the pensions dashboard will be crucial in connecting people with their later life savings, and highlighted the importance of improved financial education.

In the short term, the introduction of the dashboard may help some recent retirees discover other benefits they may have lost touch with. It is important we make sure they receive everything they are entitled to. For later generations coming through, Dashboards will also help them understand the likely income they may receive in retirement and give them time to do something about improving it.

“Improving financial education will be the long-term answer to ensuring those starting out in their careers consider putting money away for later life as the norm. Otherwise state benefits, for however long they last, will continue to provide a significant chunk of retirees’ income and continue to be one of the biggest challenges for the public purse.”

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