1m face pension poverty timebomb

MORE than a million workers nearing retirement are at the mercy of the state to pay their bills in old age, figures reveal.

As many as one in seven people aged between 55 and 65 are about to stop work with no private or workplace pension.

They will rely solely on the state pension – currently around £159 a week – to feed themselves and meet soaring energy costs.

And women are set to suffer more poverty than men, with 20 per cent having no savings compared with 12 per cent for male colleagues.

Malcolm Mclean, senior consultant at actuaries Barnett Waddingham, said: “The fact that so many people are either incapable or unwilling to save for retirement is extremely worrying and points to a looming social and economic problem down the line. We really need to keep reminding everyone that living off the state pension alone is never going to give people the sort of lifestyle most would aspire to have in retirement.

“The choice that today’s working age population has to make is a fairly stark one. They either have to save more, work longer past normal retirement age or accept a level of poverty in later life.”

The alarming figures were published by pension specialist Aegon yesterday in its latest Retirement Readiness Report.

Researchers found the number of people without a private pension dropped dramatically in their midtwenties.

This demonstrates the effect of auto-enrolment as many people benefit from employer pensions. In the early stages of people’s working life, 41 per cent of those aged 18-24 do not have a pension.

This figure drops to 16 per cent among those aged 25-34 and stays about the same up to the age of 65.

Retirement

Pensions experts have called for the £10,000 earnings threshold to qualify for auto-enrolment to be cut. They say this would help lower paid workers, particularly women who are more likely to work shorter hours and earn less.

Also, while the numbers of selfemployed have increased since the financial crash of 2008, those paying into any sort of private pension arrangement continues to fall.

Kate Smith, head of pensions at Aegon, said the Government’s auto-enrolment policy has been a “success”, with around 7.5 million workers joining since 2012.

But she said a portion of the population “either feel unable to or are unwilling to save for retirement”.

Ms Smith also pointed out that the size of deposits now required to buy a home can mean it takes longer to get on the property ladder, which will have a knock-on effect freeing up pension cash.

She added: “Our findings show how critical it is that the current review of automatic enrolment brings more people into its scope and that we find equivalent nudges to help the self-employed and gig economy workers save for pensions as the default option.”

The Department for Work and Pensions recently reported 1.1 million retirees are currently relying purely on the state for income.