Retirement planning falls by the wayside

Retirement planning falls by the wayside

27 September 2010 / by Rachael Stiles

Almost half of workers under the age of 50 do not think they are doing enough to prepare for retirement, according to Scottish Widows.

Amongst employees under the age of 50, 49 per cent admit to not doing enough now to be financially prepared for their retirement, the latest Workplace Pensions Report from Scottish Widows shows, which analysed the retirement plans of 5,000 adults.

Scottish Widows believes that employee engagement with pensions and financial education are the building blocks of a successful retirement planning strategy.

The majority of employees who are reliant on their company pension scheme, and 44 per cent said the quality of a company pension scheme is an important factor when they are considering potential employers, but the 42 per cent of employees with a defined contribution scheme did not know how much their employers actually contribute.

A further 40 per cent of working respondents said that they think employers which offer access to a pension scheme should also provide pension advice, while 55 per cent said they though they should at least be provided with general information about their company pension scheme by their employer.

The report found that amongst those who expect to receive an income from a private pension in retirement, 43 per cent were still in final salary pension scheme, with 33 per cent relying on these defined benefit schemes to provide them with more retirement income than their personal pension.

Ann Flynn, head of marketing communications for corporate pensions at Scottish Widows, said: "Despite the death of the final salary pension due to its lack of affordability or sustainability, it is clear that many people are still incredibly reliant on their employers and still believe that their defined benefit scheme will provide them with enough money to support them throughout their retirement.

"This is a worrying thought, and we would therefore encourage everyone to investigate if their existing savings are adequately covering their needs," she said.

Commenting on the pension relationship between employees and employers, Ms Flynn said that "it is important for employers to engage with their employees to help their understanding of the benefits available to them as the individual has to take responsibility and make the correct decisions about their short, medium and long term financial planning needs."

© Fair Investment Company Ltd

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