Cost of living hit to pensions causes retirement planning misery
Tim Box FPMI
- Job Title
- Advisory Council Member - PMI
New research by the Pensions Management Institute (PMI) shows that almost half (49%) of working adults have changed their retirement plans because of the Cost-of-Living Crisis. This includes 24% of people who are set to delay their retirement and 23% who have reduced their pension contributions. One in twenty people (5%) admitted to stopping their pension contributions entirely.
PMI Council Member, Tim Box explained: “Our research shows the concerns that many people have about how well they can prepare for retirement. With only 30% of our respondents believing that the State Pension will be more than half of their retirement income, the role of private pension provision to fill the gap is critically important. If the State Pension Age is to be raised to 71, as has recently been speculated about, then private pension savings are likely to be the only source of income between stopping work and the commencement of the State Pension for a huge swathe of those born after 1970.”
Two-thirds of those surveyed felt that they did not have the knowledge required to choose their pension provider despite nearly 60% showing some interest in being able to choose their own provider. This is relevant to the government’s recent lifetime provider (“pot for life”) proposals and shows the vital importance of improving financial and pension education throughout society before implementing such a radical change.
“Savers also value retirement benefits in the form of an income stream rather than a cash sum. 58% planned to take retirement benefits totally or mainly as an income with just 25% interested in taking their pension savings totally or mainly as cash. 81% of respondents valued a retirement income that would be guaranteed for life, with two-thirds attracted to an income that kept pace with price inflation.
Tim Box added: “These additional statistics show that it is vital that the Government ensures that savers are given appropriate support and education to save for retirement in an era when it is likely that State pension benefits will only become available in an individual’s eighth decade.”