Workers expect workplace savings to fund third of pensions
Brits expect 32% to come from employer schemes, 42% from the government, and 26% from their own pocket
People in the UK expect a third (32%) of their retirement income to come from workplace savings, according to research from Aegon.
The survey of 14,400 people showed that the British expected a further 42% from the government, with the remaining 26% coming from their own savings and investments.
The only country to place greater reliance on workplace savings to fund retirement was the Netherlands, with workers there expecting 38% of their total pension income to come from employer schemes. Globally people think workplace plans will fund 24% of their retirement income.
The expectation among young Britons (aged 18 to 24) is that a much lower portion of their retirement income will come from government benefits (35%) compared to those of pensionable age today (50%). The younger group anticipated that 32% would come from their employer, compared with the oldest group (65+) which expected 28.5%.
The Aegon survey follows a recent announcement from the government that the pension age will rise from 67 to 68 by 2039 (rather than by 2044 as originally proposed).
Steven Cameron, Aegon UK’s pensions director, explained different retirement systems might be contributing to the differing attitudes towards pensions. “Retirement has long been characterised as a ‘three-pillar’ model with government benefits, employer pensions and personal savings all supporting individuals when they stop working and no longer have earnings from employment,” he said. “There are significant global differences in the extent to which people expect their retirement income to come from each of these pillars.
“The research shows how each country is reacting to the crisis of an ageing population in different ways. The UK’s solution to focus on workplace savings makes it world-leading, whereas its decision to increase the state pension age is likely to mean expectations from the state pillar remain below the international average. But countries that place significant reliance on government benefits, despite widespread concerns about their sustainability as life expectancy rises, could face issues as future generations approach retirement.”
Cameron pointed out that many UK workers do not have access to a workplace pension however. “While UK employees benefit from the workplace pension focus the ever-increasing numbers of self-employed don’t,” he said. “This highlights the need to focus on how to improve pension provision for this significant element of the working population.”