Investing
Just half of retirement income to come from pensions – study
UK adults expect to generate just half of their retirement income from pensions, a study has found.
Research by Barings Asset Management revealed that British workers think pension schemes will make up 52% of their retirement income, with the next biggest contribution coming from cash (12.78%).
Just over 11% will be generated by people’s investment in property.
The findings found that one in five people (21%) don’t expect to generate any income from pensions, and only one in three (32%) anticipate that over 80% of their retirement income will come from here.
The report also found that there is a significant increase in the number of people who expect some retirement funding from an inheritance (22%), which is up from 17% in 2012 and 13% in 2011.
It also found that there is a generational divide between how people perceive pensions.
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Younger people seem less convinced by pensions, with those aged 25-34 only expecting 40% of their retirement income to come from this source. This figure falls to 35% for those in the 18 – 24 age group, but rises to 71% for people aged 65 and over.
When compared to the average findings, people aged 35 and under expect a higher percentage of their income in retirement to come from property, cash, ISAs and inheritance.
Marino Valensise, chief investment officer at Barings, said: “The tax benefits of pensions, and the ability for employers to make contributions into them, means that, for most, pensions are the best way to save for retirement. It is therefore surprising that people do not expect a higher percentage of their retirement income to come from this source, and also a little alarming that the younger generation seem less convinced by them.
“Hopefully the current auto-enrolment programme where the vast majority of people are automatically being enrolled into their company pension schemes and receiving contributions from their employers will help address this.”