Unbiased, which matches people and businesses with trusted professionals, has developed a new Pension Calculator to help individuals work out how much to save for retirement. According to new research1 by Unbiased, over a third of working-age Brits are not facing up to crucial questions about their pension savings. When asked to estimate how much income they would need in retirement, how much this would require in pension savings, and how much pension they had saved to date, large numbers admitted that they had no idea.
Unbiased hopes that by using the free Pension Calculator, people will be encouraged to engage more with these questions and take positive action.
Many UK citizens of working age have little or no grasp of the relationship between what they save into their private pensions (if anything) and the income they can hope to receive from those pensions in retirement. Over a third (37%) said they didn’t know how big a pension pot they would need in retirement, while a similar number (34%) admitted to not even knowing how much retirement income they wanted. Meanwhile a fifth (20%) did not know how much they currently have in pension savings. Remarkably, this uncertainty rises among those aged 55 and over, with 24% unsure about how much they have.
Of the respondents who did have some idea about their pensions, many seemed over-optimistic about the income that their pensions could deliver. A majority (69%) of those who expressed a desired income level said they wanted at least £20,000 a year in retirement, while nearly half (44%) of those who made an estimate believed they would need under £100,000 in their pension pot (even when combined with the maximum state pension, £100,000 is unlikely to deliver this much income).
Many are struggling to keep pace with their savings targets, judging by current levels of pension savings. A fifth (21%) of respondents said they do not have any pension savings at all, and worryingly this includes 17% of over-55s. Just under half (45%) of those aged 35-54 have under £50,000 saved, and some of these may struggle to save their target £100,000 before they retire. Adults aged under 35 unsurprisingly have less, with at least 56% having pension pots of under £50,000, but this group is in the best position to boost its savings and meet its retirement goals.
Levels of certainty, preparedness and knowledge were markedly higher among men than women. Only 26% of men were unsure what retirement income they would want, compared to 42% of women. Where people did express a preference, men also aspired to a higher retirement income (unrealistically high in many cases, with 73% hoping for £20,000 or more).
Men are less likely to be unsure how much they have in pension savings (16% vs 23% of women) and less likely to have no pension pot at all (17% vs 25% of women). Across all age groups, more than twice as many men (34%) as women (13%) had at least £50,000 in pension savings.
Men also had a clearer idea of the size of pension pot they would need in retirement. Although nearly 1 in 3 men (29%) admitted they didn’t know, even more women (46%) were uncertain. However, of those who did make an estimate, similar numbers of men (58%) and women (54%) guessed they would need £150,000 or more.
The new Unbiased Pension Calculator is designed to help savers engage more with their pension savings and take control of them. Users simply enter their current level of savings (from their most recent pension statement), their earnings and their level of pension contributions, and the calculator will estimate their likely income in retirement, if using a drawdown scheme. Most usefully, it then lets the user experiment with different figures to see what changes they need to make, in order to achieve their desired retirement income.
Karen Barrett, CEO and founder of Unbiased, said, ‘Our Pension Calculator is a wonderful free tool to encourage people to engage with the process of pension saving. It’s easy to make the mistake of believing you’re too young to think about pensions. We want to remind everyone that it’s never too soon to start doing that – or too late.
‘We’ve long known that many in the UK aren’t saving enough for retirement, and regularly encourage people to seek advice to improve their prospects. But the eye-opening revelation in our research is how many people simply don’t know how much to aim for. It looks as if large numbers are simply dodging the question – perhaps because they see it as daunting.
‘At Unbiased we’ve always challenged that negative mind-set, by directing people to the pension advice they need. Our Pension Calculator offers extra help on that journey. It shows how a little regular saving can build up over time, and how small changes now can make a big difference in the future. We hope it’ll prompt more pension savers to seek independent advice in good time.’
Notes to Editors
1 Survey by Unbiased and Opinium of 2,000 non-retired UK adults, conducted June-July 2020.
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