Citywire for Financial Professionals
Share this page:
Stay connected:

Citywire printed articles sponsored by:

View the article online at

Not saving is the only wrong pension decision you can make

A survey by the National Employment Savings Trust shows 71% of people don't save because they are scared of making the wrong decision.


by Michelle McGagh on Jun 22, 2012 at 08:00

Not saving is the only wrong pension decision you can make

When you think about your retirement, what do you imagine yourself doing? Sailing off on a round-the-world cruise, spending more time with the grandchildren or taking up a daredevil hobby?

As part of its ‘Tomorrow is worth saving for’ marketing campaign, the government-run pension scheme, the National Employment Savings Trust (Nest), has been asking consumers how they would like to spend their retirement.

We can all think of exciting ways to spend our twilight years but the truth is we are not saving enough to achieve the life we want to live in retirement.

Millions of people will be automatically enrolled into workplace pension schemes for the first time over the next three years, many of which will be put into Nest.

The government hopes that nudging people into workplace saving will kick-start a savings habit that will help people live a better life in retirement.

But if you had to guess why people had not saved anything before now you would probably say it’s because they can’t afford it – after all the financial crisis has taken its toll on most people’s finances.

However, you’d be wrong. According to the Nest survey, 71% of people who are not in a workplace pension say they don’t put enough aside because they don’t want to make the wrong decision about saving for retirement. A total of 47% of people said they didn’t know enough about what would be their best option.

You can’t blame people for being confused about their options. Savers are trying to find a decent return in a market where we have low interest and savings rates, historically low gilt returns and stockmarket turmoil.

And there is a concern that in the future we won’t know how to make the most of the money we do accumulate so we don’t even bother to start saving.

Nest said that is lack of confidence rather than unwillingness to save which is the reason why our savings culture is so lacking.

However, the survey also shows that 40% of people if they had extra cash available they would be more likely to spend it on a holiday, 20% would spend it on home improvements and the same number would use it for socialising.

Just 12% of people would put it away for retirement. This shows that while people may be baffled by pension options they also need to start prioritising their financial future ahead of short-term indulgences.

The majority of people who think they cannot afford to save could do so if they prioritise it, even if you are saving just £50 a month.

People don’t save because they are worried about making the wrong choice but when it come to pensions the only wrong decision is not saving at all.

7 comments so far. Why not have your say?

Pat Stubbs

Jun 22, 2012 at 12:55

I have always believed that I should be responsible for supporting myself and have accumulated a small pension pot. Now I'm ready to retire it is on track to provide me with not much more than loose change! If the government want to encourage us to save into a pension would it not make sense to offer a secure savings vehicle that will guarantee at least the value of our savings? My pension is now worth 20% less than in 2007. Not much incentive to continue to save is it?

report this


Jun 22, 2012 at 13:33

What and miss out on all the mean tested benefits, you must be mad

report this


Jun 22, 2012 at 15:15

The problem with saving for retirement at a young age is that the money is locked away and not available for sensible costs (housing, education, ...). In some countries (Canada for one) pension savings can be used for certain types of expense. This would encourage people to save towards their pension because the money would still be available for a limited number of defined costs and not "locked away" at the whim of the government/others.

report this

John South

Jun 22, 2012 at 17:17

Your assumptions based on survey questions may be partially correct. People do not know how to save for a pension. The questions not asked may show the real reason for the fear.

We do not trust the advisers or the governing bodies to provide is with the truth OR a CONSTANT that we can rely on.

Having invested for a pension through these bodies for over 40 years and having ended up with less than thirty percent of the promised returns due to corruption within financial services and stupidity within government. I would never recomend that my children take the same route. Once the money is put away in this "pension" box it is outside of our control.

So what is left - who are the trusted advisers? Which government bodies can be trusted not to sell off our futures. Should we trust the value of gold or invest in properrty. Can we rely on the bond markets? Are bankers telling us the truth about how they invest our money for their profits for their shareholders?

Will the Euro survive at all and if so will the dollar rise or fall? Will China take over the world finances or fall apart on unsustainable growth just like the rest?

Is the pound in your pocket worth a pound? What is a pound today and what will it be tomorrow?

Will Germany win the war by becoming the worlds financial controller with portfolio?

We all need to completely REVALUE from the bottom up - how will we survive in an unsustainable world?

Learn to live with less and protect what is within your control. Take responsibilty for your actions and live with the consequenses. Tell the financial advisers and those who ask you to believe in them for proof that they are able to deliver on promises - they will not be able to.

If I had not taken responsibilty then I would now be in the proverbial. The choice is yours and yours alone..

Take a lesson from the rich - do not spend your own money - take it from those stupid enough to give it to you,Gamble their money at the highest risk stakes, take the winnings and call them your own and give them back the losses to protect them from going under.

report this

Colston Hicks

Jun 23, 2012 at 12:30


You are right-- after 1997--- but before 1997 it was well worth locking your money away for retirement.

Guaranteed generous investment yields, augmented by tax relief made UK pensions the envy of the whole world.

report this


Jun 23, 2012 at 14:21

Having put all my pensions in Equitable Life under guaranteed scenario from 1986 to 1998 as a self employed person and see it all diwindle, I disagree with the headline statement of this article.

report this

Colston Hicks

Jun 24, 2012 at 09:08


You are right.

The guaranteed generous investment yields were ridiculously overvalued from 1973 to 1997.Instead of correcting the situation and still giving you a good return on your money the authorities decided to scrap the lot and blame it on the employers for failing to pay their contributions.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sponsored By:

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add to your safe senders list so we don't get junked.

Latest from Investment Basics

See all headlines


FTSE battles against wave of UK profit warnings

by Michelle McGagh on Jun 19, 2018 at 09:53

Sorry, this link is not
quite ready yet