UK workers lose faith in pensions system and find other ways of funding retirement

Individuals are responding to the challenge of planning for retirement by developing broad-based savings portfolios, according to a survey of UK workers.

The YouGov survey, entitled Employee Perceptions of Pensions in the UK, commissioned by consultancy Towers Perrin, found that:

  • 50% of workers have Isas or Peps

  • 60% of over 35s have shares

  • 10% of over 35s own a second property

  • just under 90% have some form of savings.

When asked what they would do with a 10% increase in salary, only 13% of respondents said they would spend it on a pension. However, ‘long-term saving’ was the most popular option with 37% of respondents.

“The survey results are encouraging. Individuals seem to be making the financial savings journey,” said Mark Duke, principal at Towers Perrin.

“The financial education message is finally getting through and those surveyed are acting responsibly and rationally by developing individual savings portfolios that suit their specific means and aims. However, it still remains to be seen whether employees are saving enough.”

When company pension plan members were asked what they would do if they were given cash instead of their pension, 43% said they would invest in long-term savings (other then pensions), under a third (29%) would convert the cash back into a pension and only 19% said they would treat the money as extra disposable income.

The survey of 2,489 employees of large private sector firms paints a complicated picture of evolving personal financial needs, and Duke warned that companies should not concentrate on a one-size-fits-all pension plan.

“Going forward, companies will adopt a more libertarian stance to company pensions, where employees will make their own choice as to how they want and how much they want to save for their retirement and that, surely, has to be the best form of financial engagement,” he said.

Comments are closed.