Almost one in seven people retiring this year have saved nothing towards a pension, and 11% say they'll need to rely on their State Pension. It means they'll have to get by on £1,400 a year less than the minimum required to make ends meet - and things are even worse for women.
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The findings emerged from a study by Prudential, which found that women were far less likely than men to have saved for retirement - and almost one in five will retire with no pension of their own
The State Pension was never designed for a comfortable retirement on its own. It falls £1,400 a year below Joseph Rowntree Foundation's Minimum Income Standard for a single pensioner.
The only silver lining is that the number of women making no provision for themselves is dropping, and that the 19% with no savings is lower than the 22% last year.
The more positive news is that overall, the State Pension accounts for roughly a third of most pensioner incomes. This seems to indicate that most people who are on the verge of retirement have taken some sensible steps to save for the future.
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While this is great news for most of today's pensioners, it's worth taking a second to consider the implications for the future. Of those who are retiring this year with a pension of their own, 42% of people say the majority of their savings are in a workplace final salary pension. Over the next decade, we can expect to see this figure drop dramatically, as the death of final salary pensions makes its presence felt among retirees.
In their place, workplace schemes now tend to be far less generous defined contribution schemes. This year, workplace DC schemes account for 13% of pensions, but over time, we can expect more and more workplace pensions to be DC. Given that the vast majority of DC schemes are far less generous than DB schemes, the impact of this will be a dramatic drop in pensioner incomes.
At the moment most open workplace pensions are DC schemes, offered through automatic enrolment, offering the minimum possible employer contributions under the legislation. The experts agree this is a drop in the ocean compared to what people will actually need to retire on, so unless people start to save more, we can expect state pensions to make up a much larger percentage of retirement incomes.
Likewise, 13% of people retiring this year say most of their pension income comes from personal pensions. As an increasing proportion of the workforce moves into the gig economy, and works on a freelance basis, we will either see this figure rise, or we will see the numbers with no pension savings at all shoot up.
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What can you do?
The figures go to show how vital the State Pension is to the majority of people, and how important it is to ensure you are entitled to as much of the full State Pension as possible. Stan Russell, retirement income expert at Prudential, said: "The State Pension is a vitally important component of pensioners' incomes – especially as the 'triple lock' ensures that it increases in value every year. People throughout their working lives should be doing everything they can to ensure that they are entitled to the full amount of State Pension, including making voluntary National Insurance contributions to cover any missing years."
It also shows how essential it is for the next generation to take charge of their own retirement savings. The death of final salary pensions, and the paucity of most DC schemes, means the only chance the next generation has of a decent retirement income is to put aside whatever they can afford for the future.
As Russell says: "While saving is not always easy, especially when the multitude of costs in everyday life get in the way, it is important to try to save as much as you can from as early as you can, to help to avoid financial struggles during retirement."