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40% of Brits turn their backs on pension saving
As a nation we are not saving enough for our old age, and it's the younger generation who are falling furthest behind.
by Michelle McGagh on Sep 18, 2012 at 15:17
Recession-hit Brits are turning their backs on pensions, with 40% failing to save for retirement, and it is the youngest in society who are finding it hardest to save.
According to insurer AXA’s Big Money Index, the number of consumers unable to save for their future has risen by 6% since December 2011.
The index surveys people who fall into eight different demographics:
- The stretched: 20s to 30s, low income, with few financial assets.
- Young professionals: mid-20s and 30s, no children, average income, likely to be taking out a first mortgage, low disposable income.
- Nest builders: young families in their 30s to 40s, large mortgages.
- Successful security: 40s to 50s, married, above average income, many with second homes.
- Exclusive lifestyles: mid-50s to 60s, married with grown-up children, mortgage-free, high disposable income with considerable assets.
- Modest middle years: mid-50s to 60s, older families with financial dependents, average income.
- Prosperous later years: empty nesters over 60 gearing towards retirement, no mortgage, with average income but high net worth.
- Under-funded seniors: retired people living in sheltered accommodation, low income and no savings, dependent on the state.
Overall, one in four is not saving for retirement, and 20% are not saving at all. The number of people saving into company pensions and personal pensions fell by 2%, and investment in self-invested pension plans (Sipps) fell 1%. AXA said this shows people are either selling existing assets to pay for retirement or adopting a ‘head in the sand’ approach to retirement income.
A total of 19% are relying on downsizing their home to pay for their retirement, and 20% have stopped putting money into savings at all, a 3% increase since December.
Sacrificing tomorrow for today
Those in the 'stretched’ demographic are struggling the most, with 59% not contributing to a pension and 27% having stopped saving completely, instead simply trying to survive the present.
Andy Zanelli, head of retirement planning at AXA Wealth, said: ‘It is alarming to see how many consumers are failing to invest in their future in favour of surviving the present, with fewer people than ever now contributing to a pension.
‘The current attitude to saving is unsustainable if we are serious about protecting our ageing population in years to come. Rising longevity means that, for many, retirement is likely to be longer than ever before, so planning ahead and taking control of their financial future as early as possible is vital if consumers want to be able to meet their ambitions in later life.’
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