One in seven people aged 55-65 are approaching retirement with no private or workplace pension of their own. New research reveals that unless something drastic happens, 1.2 million people will retire with nothing to live on but their state pension - which is looking increasingly under pressure.
Aegon's Retirement Readiness Report found that things are particularly bad for women in this age group - a fifth of whom have no pension of their own
Aside from relying on their spouse, those without pension savings will only have the state pension to live on. For those entitled to the full amount from the new single tier state pension, this is equivalent to an income of £8,297 per year, and, in the main, it will no longer be possible for spouses to inherit their partner's pension.
The Joseph Rowntree researches every year what it calls the Minimum Income Standard - which assesses the amount of cash needed for the minimum acceptable standard of living. It found that one in seven pensioners are now below the standard - rising to just under a quarter of single pensioners. It demonstrates the real risk that retiring without a pension poses to our standard of living.
The good news is that in the long run, this phenomenon will become less common, because younger people are far more likely to her been enrolled into a workplace pension automatically when they were starting out - which means they should have something to fall back on in retirement.
However, Kate Smith, Head of Pensions at Aegon said that auto-enrolment doesn't bring everyone into the pension fold - so some will be left pensionless. She explains: "There is a portion of the population who either feel unable to or are unwilling to save for retirement. This may include those who are self-employed or in the 'gig' economy and those employees who do not meet the earnings or age criteria for auto-enrolment. Others may consciously opt out of a workplace pension perhaps for affordability reasons or simply not recognise the benefits of pensions over other forms of saving."
As a result, she wants to see equivalent nudges to help the self-employed and gig economy workers save for pensions as the default.