45% of people aged 45 to 65 put nothing into their pension pot each month, according to a representative survey of 328 people in the United Kingdom commissioned by The Landlord’s Pension. Another 28.8% put just £100 or less into their pension each month, meaning that almost three-quarters aren’t putting enough into their pension pot to enjoy a comfortable retirement.
Women are less likely to put money into their pension pot than men: 48% of women put nothing in each month, compared to 41% of men.
How Much Will You Earn from Your Pension?
Our survey found that most people aged 45 and over don’t expect to live comfortably on their pension. In fact, 38% of respondents said that they expect to earn nothing at all. A further 32% expect to earn under £800 a month from their pension, which is significantly less than the minimum wage.
Our survey also reveals a gap in expectations. While 45% of people are putting nothing into their pension, only 38% of people expect to earn nothing from their pension. This suggests that some people think that they’ll be covered by a state pension. However, only people who have contributed National Insurance for 35 years are able to access a full state pension and only people with 10 years worth of contributions are able to access any form of state pension at all.
Just over one in five people expect to live very comfortably in retirement and earn more than £55,000 per year from their pension alone.
What’s the Average Pension Pot in the UK? Almost Half of us Have Nothing
We asked 259 people aged 45 and over how much money they had in their pension pot.
40.7% said that they had nothing. A further 29.5% have less than £50,000. This puts the majority of people well below the amount that they’ll need in order to live well. A study by Which? suggests that a couple should have a combined pension pot of £210,000 to enjoy a comfortable retirement.
Men are much more likely to have a large pension pot than women. While 21.1% of women said that they have at least £50,000 in their pension, almost twice as many men (38.5%) claimed to have the same amount.
Many People Would like to Retire before 65
Almost half the people surveyed said that they would like to retire before 65. The current state pension age is 63 for women and 65 for men, but this will increase to 67 by 2028. Almost a quarter expect to be working well past 70 (and possibly always!)
Most People Don’t Know Their Options When It Comes to Pensions
When we asked 100 people if they knew what “SIPP” stands for, less than a third were able to answer correctly. Even fewer people — just a fifth of respondents — knew what SSAS stands for. It’s clear that many of us need help when it comes to understanding non-conventional pension options like SIPP (self-invested personalpension) and SSAS (small self-administered scheme).
The majority of people don’t know where their pension is invested (70.05%) and nearly three quarters (73.3%) don’t fully understand the charges that will be applied to their pension.
Since 2015, the pension freedoms changes have given more people control of their pension than ever before. One option is investing the pension in to property based investments. However, from the results of our survey, it’s clear that the majority of individuals need support and education to understand how their pension works and to determine the best option for them.
To learn more about pensions and the options open to you, call The Landlord’s Pension on 020 3907 8400 for a free, no-obligation consultation with a pensions specialist.