Study finds nearly half of us don't make provisions for retirement

Study finds nearly half of us don't make provisions for retirement

	Published : Wed, 23 Nov 2005 07:05 By : Richard Owen Print this Story

LONDON: As much as 50 per cent of Britons do not make any provisions for their retirement, saying they do not have faith in the pension schemes, according to a new research study.

Only a fifth of the 2020 people surveyed believe that their company or their personal pension scheme would ensure adequate income in their retirement with some 37 per cent leaving to an act of God to make them invest in a scheme, according to the study by Instant Access Properties. As much as two-thirds rely on the state pension to take care of them along with personal savings, investments or inheritance.

But one person in five firmly believes he will have to work past his retirement age to make a living. An equal number say they will have to sell the family home to raise funds.

Interestingly, 44 per cent of those surveyed said they would prefer investing in property, which they believe would provide the best return for retirement. Just 22 per cent opted for a private pension, 17 per cent for investment in shares and 15 per cent in bonds.

Instant Access Properties' chief operating officer Tony McKay said it is not surprising that more people prefer investment in property as in the past 30 years U.K. house prices have risen on average by more than 9 per cent year on year.

A similar research carried out by pension provider B&CE Benefit Schemes revealed that around one million full-time workers in the country have to rely only on the state pension scheme after their retirement. A quarter of workers are not currently saving for their retirement and among this group, 22 per cent said they were relying solely on the state pension.

The government is now debating how to fund an ever-increasing pension bill as more and more people are entering retirements. There are reports that the Pension Commission under Lord Turner would recommend an increase in retirement age from the present 65 years to 67 years.

The government is allowing from April next year investments in property as part of pension savings with tax benefits.

It is estimated that just 30 per cent of people contribute to a pension, just about half contribute less than 100 pounds a month to a pension fund, 10 per cent investment between 200 pounds and 500 pounds a month and 3 per cent make contributions of more than 500 pounds a month.

The B&CE study said on average workers said they would require a pre-tax annual income of 24,230 pounds in retirement which is slightly higher than the current average income of 24,100 pounds. But at the lower end of the scale, two-thirds of workers believe they will need a pre-tax income of at least 17,500 pounds a year.

B&CE Benefit Scheme's deputy chief executive John Jory said it is a matter of concern that in spite of creating awareness about the need to save for retirement, there are still a million people who will have only the state pension plus possibly Pensions Credit to live on.