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Pension warning: 50% of UK adults not putting anything aside

27 May 2009 / by Rachael Stiles
Half of adults in the UK are not preparing for their retirement by neglecting to pay anything into a pension pot, according to research carried out for the BBC.

Whether they cannot afford it, or it is simply not at the top of their priority list, half of UK adults aged between 20 and 60 admitted that they pay nothing towards preparing for the day when they retire.

Among the under-30s, there is evidence of even less preparation, with just 36 per cent paying into a pension scheme, the majority of whom cite a lack of affordability as the main culprit as they concentrate on paying off debts instead, but others said it was because the recession had left them redundant or without any spare cash.

Other young people said a lack of knowledge about pensions is what stands in the way of starting one, or they thought that retirement was too far away to start worrying about or planning for now. Despite the low number of under-30s who have started their retirement planning, half still expect to enjoy a comfortable retirement.

Almost half (45 per cent) of those aged between 41 and 60 are not currently paying anything into a pension pot, and their reasons for failing to prepare for the future also include those who have been made redundant and are therefore not in a position to do so, and women who have never joined a pension scheme because they left work to bring up a family.

The threat of having to work long into retirement as a result of not having sufficient pension provision is fast becoming a reality for the 40 to 60 age group, for whom it is becoming more of an immediate concern than the younger demographic.

"Unfortunately the tide has turned and younger people face even more challenges in saving for their retirement," Ed Gardner, chief executive of UK retirement and savings at pension and insurance firm Metlife told the BBC. This is due to a range of circumstances, he said, such as the closure of many generous final salary pension schemes, leaving people to depend on defined contribution pension schemes, generally providing a smaller return.

Mr Gardner said that people should calculate how much money they would need in order to retire at 65 and then live for a further 25 or 30 years, and the result, he said, "is that many people are currently saving nowhere near enough."

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