Majority of Brits not on track to retire comfortably

Digital pension provider Penfold has warned today that Brits should be taking action early to plan for their financial future - following research which shows the majority of workers are not on track to retire comfortably. 

A study of 2,000 British workers commissioned by Penfold has revealed that over half (55%) don’t know how much money they have in their pension pot, with 36% saying they don’t feel confident about planning for their retirement. 

Alarmingly, those closer to retirement are less pension-aware than their millennial counterparts with 57% of 55-64 year-olds saying they don’t know how much money is in their pension, compared to 51% of 25-34 year-olds, indicating that more needs to be done across the board to increase retirement preparedness in the UK. 

Northern Ireland seems the most pension-savvy region of the UK, with 20% of respondents having checked their pension within the last month - double the national average of 10%.

When asked how much they expect to need in their pension when they retire, almost half of respondents (45%) said they thought they’d need up to £200,000 - three percent of those believe they’d manage on just £1,000-10,000. 

Pension experts at Penfold, however, recommend workers follow the ‘two-thirds rule’ for their pension. That means that someone who earns £35,000 per year before tax, should look to generate an income of £23,333 - two-thirds of their working salary - per year during a 20-year retirement. For this,  workers will actually need to amass £466,600 in their pot.

In order to get from £10,000 to £466,660, Penfold is advising Brits to take action early - and there’s no better time than next May bank holiday.

Pensions expert Pete Hykin, Co-Founder of Penfold, said: "This data is incredibly worrying but sadly, not surprising given how the pensions industry has historically failed to engage savers with the right way to save towards a comfortable retirement. With so many obstacles - jargon-heavy paper correspondence, terrible customer service and a lack of investment options that align with your values, it can take a lot of headspace to deal with on top of an already busy life."

“While it may not seem like the most exciting way to spend a sunny May weekend, getting a hold of your finances can actually be surprisingly easy. The new wave of digital pension providers should be able to help you make a saving plan that’s right for you, as well as locate and transfer missing pension pots in just a few clicks.

To help those unsure where to even start, Penfold is sharing its top five financial spring cleaning tips:

  1. The first step to planning for your retirement is to log into your pension provider and check how much you currently have saved
  2. Use a pension calculator to work out how much you need to put aside each month to retire comfortably
  3. If you’re self employed and don’t have a workplace pension - open a Self Invested Personal Pension (SIPP)
  4. If you’re struggling financially, it’s okay to temporarily reduce your pension contribution but maintaining some level of contribution is best
  5. Locate, access and consolidate missing pension pots, using a pension tracker

Penfold is working to change the pension industry by making it more consumer friendly, so that Brits will be better able to take their financial futures into their own hands. Penfold customers and non-customers alike will be hard-pressed to find a better use of their time this weekend than taking the first step towards a comfortable retirement.