Pension UK: Average pot sizes sit at £42k, 18% less than what’s recommended – take action
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Pension savings are usually built up throughout a person’s working life and workers are regularly encouraged to contribute to their pots as much as possible. Generally, the sooner one contributes to their pensions, the more likely they are to have a comfortable amount set aside for their later years.
However, new research from finder.com has found that savers do not have nearly enough saved to afford a comfortable retirement.
Recently, finder.com conducted a survey of a nationally representative sample of 2,000 people throughout Britain, accounting for gender, age and region.
The result of this survey showed the average pension pot in the UK stands at just £42,651.
This figure drops even further for non-retirees, who only have £33,809 saved on average.
For comparison, a calculation taken from Profile Pensions pension calculator found that £237,000 would be needed for a comfortable retirement for someone who owns their own property at the beginning of retirement (aged 67).
The same research highlighted 19 percent said they had no form of private or workplace pension whatsoever, with a further 18 percent having a workplace pension but no private scheme.
Worryingly, the survey showed a “very worrying discrepancy” in pension amounts for males and females.
On average, men have £62,336 saved in their pension, while women have just £22,735 in comparison, 64 percent less.
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When examining the differences between ages, it was found millenials have £17,175 saved on average, and, “as you would expect”, these totals rise along with the generations.
Gen X’ers have £35,175 saved, while baby boomers have £61,546 in their pension pot.
Despite many of them being retired, the average amount saved for the silent generation is only £111,855.
However, when it comes to having no pension at all, it is actually the older generations who appear less likely to have a workplace or private pension – relying on just a state pension to live off.
Despite many people within these demographics being retired, a “staggering” 22 percent of Baby Boomers and 30 percent of the Silent Generation said they did not have a workplace or private pension. These figures drop to 15 percent for Millennials and 19 percent for Gen X.
Zoe Stabler, an Investment Writer at the personal finance comparison site finder.com, reviewed these figures.
Ms Stabler said: “The pandemic has been extremely tough for Brits in many ways, with a lot of people having to take unprecedented steps in order to stay afloat financially.
“It is understandable that some Brits have reduced, or paused, payments in order to direct money to more immediate priorities.
“However, if you are someone who has had to do this, it is vital that you look at replacing this money or at least starting to pay into your pension again.
“The power of compound interest means that what you pay in now could be a life changing amount if you’re able to leave it for decades.
“As an example, £10,000 paid in now, earning an interest rate of 5 percent per year, would be worth £25,330 in 20 years, £41,259 in 30 years and £67,207 in 40 years.
“Also, if you opted out of your workplace pension in order to save money during the pandemic, you should look to rejoin it as soon as you can. If you contribute five percent of your salary each month towards it, your employer is obliged to pay a minimum of three percent on top of this, which is effectively free money topping up your pension!”
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