Pensions are a hot topic - over half of the British population admits to either not saving for a pension or not saving enough for the retirement that they would like to live. Auto-enrolment ( made law in October 2012) are starting to reduce this statistic, making pensions easier to understand and more accessible for the average person. That said, there are still many misconceptions and surprising facts out there.
Think you know all you need to know about pensions?
Read on for some interesting lesser-known facts that could end up changing your pension – and your life.
1. Working when you're 90 may be the norm – if you’re not prepared
Currently one-fifth of British people aged 65-69 are still in employment. Some scientists today predict that living to the ripe old age of 100 years old will be the norm for future generation, meaning that the working age is likely to continue to stretch further into one’s golden years. Many experts predict that the average life expectancy will be 85 and 87 for men and women in the UK by the year 2030!
Although there is no official retirement age in this country, the current age to receive state pension is 65. With plans to increase the age limit for the state pension to 67 coming soon, this figure is sure to keep rising. For millennials, this could signal that people will have to work well into their 80s or 90s in order to retire comfortably.
2. The Gender Gap – Pensions for women are £7500 less than men's on average.
The pension gap between men and women is widening, with women's pensions often amounting to far less than their male counterparts. To some extent, this is because women tend to take more career breaks in order to have children, and they also often engage more in part-time work. On average, annual earnings for women are lower than for men; there is also a tendency for women to work in industries where there is less focus on pension provision. This can mean less money stored in the pension pot, which causes concern with the next fact...
3. Three Years Difference – Women live longer
The average life expectancy for women is almost three years more than for men. The average life expectancy for women after 65 is 24.3 years compared to men’s at 21.6 years. As life expectancy increases, the importance of building a secure and rewarding pension pot is ever more integral to a comfortable lifestyle in one’s later years. By 2050, life expectancy for women is expected to rise even higher, a cause for worry when compounded by the fact that pensions for women are on average much lower than pensions for men. It is more important that women carefully consider their pension investments. Thankfully, the team at Carey Pensions can help you to ensure that your pension plans are well prepared.
4. Six million people are now investing for their future
As a result of the auto-enrolment scheme into workplace pensions, six million workers have now begun saving into their pension funds. Over 100,000 employers have now staged and have a workplace pension scheme and have enrolled their workers. Although auto-enrolment is automatic for eligible employees, employers do need to take vital steps in order to set up a workplace pension for their staff. Auto-enrolment has been attributed to an emerging change in savings culture and future planning and provisioning.
5. The rise of pensioners
In 2010, there were three people working for every pensioner in the UK; however, back in 1901, there were 10 people working for every pensioner! This ratio is expected to continue to decrease owing to an increase in life expectancy and lower birth rates. By 2050 it has been predicted that there will one pensioner to every two workers. This prediction makes it even more important that the government continues to put saving provisions in place to support the growth of pensioners in the UK.
6. The Government spends 8.4% of GDP on pensions
To compensate for the ‘aging population,' whereby people are living longer and declining birth rates have reduced the working population, the government have been forced to increase the amount of expenditure on the state pension. It is expected that by 2050, the government will have to spend 11.4% of the country’s GDP on pensions alone!
7. Don’t know where your money goes? You’re not alone!
Over one-third of the working population in the UK does not know where their pension money is invested. This shows people are not considering how the economic climate can affect the return of pension investments. Individuals through auto-enrolment don’t have to worry about this most schemes will have got specialist independent investment advisers to ensure good member outcomes. Annual benefit statements and illustrations will help to inform members of a workplace pension what their projected fund will be at retirement, which will assist them with discussing with an independent financial adviser whether they should increase their own contribution levels to enhance their retirement position.
Interesting facts above? Want to know more about workplace pensions and how they can work for employers and employees, and how you start engaging and planning for a more comfortable retirement by making smart choices today?
Call or email the experienced team at Carey Pensions. We are happy and ready to help!