When it comes to confidence toward a comfortable retirement, we're pretty evenly split across the country.
More than half (52%) of people with a defined contribution (DC) pension believe they will be financially comfortable in retirement, while 48% think this will not be the case, a new survey has found.
DC pensions are commonly used as workplace pensions, and the retirement income you ultimately receive will depend on factors such as how much you contribute, how your investments perform, and how you use the funds in retirement.
Research conducted for consultancy firm Barnett Waddingham found that it is often older workers who are less confident about their retirement prospects.
Worryingly, almost a third (32%) of people planning to retire within two years are not confident they will be comfortable in retirement.
On a more positive note, seven in ten adults under 24 (71%) feel confident about their retirement prospects, as do six in ten adults ages 25 to 30 (61%).
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Automatic enrolment into workplace pensions began in 2012. This means that employees can save into the pension scheme unless they decide to opt out. They also get a pension boost through employer contributions and tax relief.
Unlike younger generations, only about two-fifths (42%) of 51-55 year olds are confident about retirement.
People over 55 showed a slight increase in confidence, with half (50%) feeling confident.
Across all age groups, one in 25 (4%) do not feel confident they can retire.
Interestingly, the study found that 2% of workers who own their homes outright do not anticipate retirement at all, as do 3% of workers with a mortgage.
However, this rises to 5% of people living in private rented homes and 7% of people living in social or council homes.
The study also sought to understand why people who feel confident about their retirement prospects feel this way.
Of those who feel confident, many also have other sources of funding besides their DC pension, the survey found.
Three in ten (29%) have other investments and a similar proportion (28%) own real estate outright.
According to the survey, men are more likely to have other investments than women.
Older workers who are confident about their retirement prospects are particularly likely to have DC pension savings as well as defined benefit (DB) pensions, the survey found.
The DB pension is a system that promises to pay a certain amount of income to pension savers according to their salary, such as final salary pension upon retirement.
The study found that 8% of employees who are confident about retirement have a DB pension, compared to almost a fifth (18%) of workers aged 51-55 and 19% of workers aged 61-65. .
One-fifth (20%) of confident savers cited the fact that they received a workplace pension as the reason.
But Barnett Waddingham warns that saving just the bare minimum for pension alone could leave you shortchanged in retirement.
Among those who are unsure about their retirement prospects, more than a third (35%) believe they simply do not have enough money saved for retirement.
A fifth (19%) do not save enough to cover both themselves and their partner, and a third (32%) do not believe they earn enough money to save for a comfortable retirement.
Nearly three in ten (29%) say they have no other savings or investments other than DC ports.
One in eight (12%) people are unsure about retirement because they think they will rent as a pensioner.
Lack of visibility into retirement also plays a role. Among those who are uncertain about retirement, a quarter (26%) do not know what a comfortable retirement looks like or how to get there, and 8% have never thought about retirement.
Mark Futcher, partner and head of DC pensions at Barnett Waddingham, said: “In a rare bit of good news, people now feel more confident about retirement as they get closer to it. This means something is going right.
“But there are two main areas of concern. First, one-third of people planning to retire in a few years are entering that phase of their lives without any certainty that they will be able to live comfortably.
“And most people who feel confident do so because of other assets, property, personal and DB pensions.”
The study was conducted by Censuswide for Barnett Waddingham in March, targeting more than 2,000 UK employees receiving DC pensions.
Futcher also offers some tips to help people feel more “pension confident”.
Not everyone is in a financial position to increase their pension contributions, but paying more can help boost pension confidence.
Generally, the earlier someone pays out, the longer it takes for money to grow in the pot. Keep in mind that the value of your investments can go down as well as up.
Futcher says: “Make sure you are receiving the maximum contribution from your employer, especially if your employer uses a tiered contribution structure.
“Furthermore, using salary increases as an opportunity to increase premiums can increase confidence in securing a comfortable retirement. “If you increase your contribution each time your pay rises, you won’t notice the impact on the amount you take home each month.”
Also remember that knowledge is power. Knowing how much your pension (and other funds from your previous employer) are worth can help you understand whether you're on track with your retirement savings.
If you're having trouble understanding your pensions, you can visit the government-funded MoneyHelper website or ask your employer to tell you where you can find more information about workplace pensions.
Seniors over 50 years of age can also use Pension Wise’s free information service.
Downloading your pension provider's app and checking your pension pot regularly can help you feel confident. Find in-app tools to help you figure out how much pension you'll receive.
Pension tracking services can also help you track down “lost” pensions. The Pensions and Lifetime Savings Association (PLSA) also sets out a set of retirement living standards that can give people a general idea of what kind of lifestyle they can expect in retirement. Some people may want to pay for financial advice.
The gov.uk website also helps people check their state pension forecasts, so they can get a better overview of their retirement prospects.